10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2021

OR

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

For the transition period from              to             

Commission File Number: 333-159299

VANTAGE DRILLING INTERNATIONAL

(Exact name of Registrant as specified in its charter)

Cayman Islands	98-1372204
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

c/o Vantage Energy Services, Inc.

777 Post Oak Boulevard, Suite 800

Houston, TX 77056

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (281) 404-4700

Securities registered pursuant to Section 12(b) of the Act:

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

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 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 every Interactive Data File required to be submitted 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 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.

Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	☐
		Emerging growth company	☐

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 outstanding as of August 2, 2021 is 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  

TABLE OF CONTENTS

		Page
SAFE HARBOR STATEMENT		3
PART I—FINANCIAL INFORMATION
Item 1	Financial Statements	6
	Consolidated Balance Sheets	6
	Consolidated Statement of Operations	7
	Consolidated Statement of Shareholders’ Equity	8
	Consolidated Statement of Cash Flows	9
	Notes to Unaudited Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4	Controls and Procedures	31
PART II—OTHER INFORMATION
Item 1	Legal Proceedings	31
Item 6	Exhibits	31
SIGNATURES		34

2

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are included throughout this Quarterly Report, including under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of 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.

Among the factors that could cause actual results to differ materially are the risks and uncertainties described under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 18, 2021, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report, and the following:

reduced expenditures by oil and gas exploration and production companies;

general economic conditions and conditions in the oil and gas industry, including the worldwide supply and demand for oil and gas, and expectations regarding future prices of oil and gas;

excess supply of drilling units worldwide;

competition within our industry;

growing focus on climate change and its impact on the reputation of fossil fuel products or services;

our level of indebtedness;

epidemics, pandemics, global health crises, or other public health events and concerns, such as the spread and resulting impact of the COVID-19 pandemic and the effectiveness of associated vaccinations and treatments;

governmental, tax and environmental regulations and related actions and legal matters, including the actions taken by governments in response to the spread of COVID-19, including its highly contagious variants and sub-lineages, as well as the results and effects of legal proceedings and governmental audits, assessments and investigations;

actions taken by members of OPEC, OPEC+ and other foreign, oil-exploring countries;

termination or renegotiation of our customer contracts, and the invoking of force majeure clauses, including, but not limited to, as a result of the COVID-19 pandemic;

losses on impairment of long-lived assets;

any non-compliance with the U.S. Foreign Corrupt Practices Act, as amended, and any other anti-corruption laws;

the sufficiency of our internal controls;

operating hazards in the offshore drilling industry;

operations in international markets, including geopolitical, global, regional or local economic and financial market risks and challenges, applicability of foreign laws, including foreign labor and employment laws, foreign tax and customs regimes and foreign currency exchange rate risk;

ability to obtain indemnity from customers;

adequacy of insurance coverage upon the occurrence of a catastrophic event;

effects of new products and new technology on the market;

the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems;

our small number of customers;

consolidation of our competitors and suppliers;

changes in the status of pending, or the initiation of new litigation, claims or proceedings, including our ability to prevail in the defense of any appeal or counterclaim;

3

changes in legislation removing or increasing current applicable limitations of liability;

limited mobility of our drilling units between geographic regions;

levels of operating and maintenance costs;

our dependence on key personnel;

availability of workers and the related labor costs;

increased cost of obtaining supplies;

changes in tax laws, treaties or regulations;

credit risks of our key customers and certain other third parties;

our ability to incur additional indebtedness;

compliance with restrictions and covenants in our debt agreements;

our incorporation under the laws of the Cayman Islands and the limited rights to relief that may be available compared to U.S. laws; and

identifying and completing acquisition opportunities.

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 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 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.

4

GLOSSARY OF TERMS

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

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
Board of Directors	The Company's board of directors
Comparable Quarter	The three months ended June 30, 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 June 30, 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
OPEC+	The Organization of the Petroleum Exporting Countries plus 10 non-OPEC nations
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

5

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Vantage Drilling International

Consolidated Balance Sheets

(In thousands, except share and par value information)

(Unaudited)

	June 30, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	111,424		$	141,945
Restricted cash		7,800			7,996
Trade receivables, net of allowance for doubtful accounts of $5.0 million, respectively		31,605			24,717
Materials and supplies		50,946			49,861
Prepaid expenses and other current assets		20,212			29,151
Total current assets		221,987			253,670
Property and equipment
Property and equipment		797,078			794,944
Accumulated depreciation		(306,337	)		(278,562	)
Property and equipment, net		490,741			516,382
Operating lease ROU assets		3,144			3,997
Other assets		15,315			12,126
Total assets	$	731,187		$	786,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	28,264		$	25,466
Other current liabilities		32,572			24,734
Total current liabilities		60,836			50,200
Long–term debt, net of discount and financing costs of $3,962 and $4,781, respectively		346,038			345,219
Other long-term liabilities		13,971			15,011
Commitments and contingencies (see Note 8)
Shareholders' equity
Ordinary shares, $0.001 par value, 50 million shares authorized; 13,115,026 shares issued and outstanding, respectively		13			13
Additional paid-in capital		633,758			634,181
Accumulated deficit		(324,604	)		(259,655	)
Controlling interest shareholders' equity		309,167			374,539
Noncontrolling interests		1,175			1,206
Total equity		310,342			375,745
Total liabilities and shareholders' equity	$	731,187		$	786,175

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

6

Vantage Drilling International

Consolidated Statement of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue
Contract drilling services	$	31,655		$	33,151		$	49,380		$	77,470
Reimbursables and other		3,946			3,624			6,387			10,761
Total revenue		35,601			36,775			55,767			88,231
Operating costs and expenses
Operating costs		36,056			38,104			61,413			86,659
General and administrative		4,967			4,716			10,462			11,886
Depreciation		14,161			18,401			28,286			36,417
Total operating costs and expenses		55,184			61,221			100,161			134,962
Loss from operations		(19,583	)		(24,446	)		(44,394	)		(46,731	)
Other (expense) income
Interest income		10			111			110			812
Interest expense and other financing charges		(8,511	)		(8,601	)		(17,021	)		(17,021	)
Other, net		(179	)		12			(793	)		2,367
Total other expense		(8,680	)		(8,478	)		(17,704	)		(13,842	)
Loss before income taxes		(28,263	)		(32,924	)		(62,098	)		(60,573	)
Income tax provision (benefit)		720			(1,024	)		2,882			1,897
Net loss		(28,983	)		(31,900	)		(64,980	)		(62,470	)
Net (loss) income attributable to noncontrolling interests		(18	)		12			(31	)		14
Net loss attributable to shareholders	$	(28,965	)	$	(31,912	)	$	(64,949	)	$	(62,484	)
Loss per share
Basic and Diluted	$	(2.21	)	$	(2.43	)	$	(4.95	)	$	(4.76	)

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

7

Vantage Drilling International

Consolidated Statement of Shareholders’ Equity

(In thousands)

(Unaudited)

	Six-Month Period Ended June 30, 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
Share-based compensation		—		—		330			—			—			330
Net (loss) income		—		—		—			(31,912	)		12			(31,900	)
Balance June 30, 2020		13,115	$	13	$	633,594		$	(45,420	)	$	1,258		$	589,445
	Six-Month Period Ended June 30, 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
Share-based compensation		—		—		31			—			—			31
Net loss		—		—		—			(28,965	)		(18	)		(28,983	)
Balance June 30, 2021		13,115	$	13	$	633,758		$	(324,604	)	$	1,175		$	310,342

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

8

Vantage Drilling International

Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(64,980	)	$	(62,470	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense		28,286			36,417
Amortization of debt financing costs		819			820
Share-based compensation expense		337			1,028
Deferred income tax (benefit) expense		236			(90	)
Gain on disposal of assets		(2,715	)		—
Gain on settlement of restructuring agreement		—			(2,278	)
Changes in operating assets and liabilities:
Trade receivables, net		(6,888	)		(7,202	)
Materials and Supplies		(1,481	)		(1,297	)
Prepaid expenses and other current assets		(1,440	)		2,545
Other assets		(1,821	)		3,410
Accounts payable		2,798			(14,680	)
Other current liabilities and other long-term liabilities		5,905			(8,717	)
Net cash used in operating activities		(40,944	)		(52,514	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment		(2,711	)		(2,021	)
Net proceeds from sale of Titanium Explorer		13,557			—
Net cash provided by (used in) investing activities		10,846			(2,021	)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions from holders of noncontrolling interests		—			—
Debt issuance costs		—			—
Net cash provided by financing activities		—			—
Net decrease in unrestricted and restricted cash and cash equivalents		(30,098	)		(54,535	)
Unrestricted and restricted cash and cash equivalents—beginning of period		154,487			242,944
Unrestricted and restricted cash and cash equivalents—end of period	$	124,389		$	188,409
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest	$	16,197		$	16,197
Income taxes (net of refunds)		2,431			4,617
Non-cash investing and financing transactions:
Reallocation of Soehanah jack up rig acquisition value from equipment to materials and supplies		—			1,019

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

9

VANTAGE DRILLING INTERNATIONAL

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 operations 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, Including on the Oil and Gas Industry

The COVID-19 pandemic continues to spread worldwide and has exacerbated since the World Health Organization (the "WHO") first classified the COVID-19 outbreak as a pandemic in March 2020. The global spread of COVID-19, including its highly contagious variants and sub-lineages, have caused and continue 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, being forced to implement multiple and recurrent shelter-in-place and stay-at-home orders. These governmental responses 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.

We experienced significant challenges in 2020 when the COVID-19 pandemic began such as: (i) lower revenue due to terminations of (or amendments to) our existing drilling contracts; and (ii) increased expenses due to higher labor and related costs.  The Company actively managed and continues to manage the business in an attempt to mitigate any further impact from the continued presence of the COVID-19 pandemic; however, management anticipates that our industry, and the world at large, will need continue to operate in and further adapt to the current environment for the foreseeable future.

There has been a relatively strong recovery in global oil prices for the first half of 2021 (as compared to 2020) and our management remains cautiously optimistic with respect to the potential for the recovery to continue. However, oil and gas prices are expected to continue to be volatile as a result of (i) the ongoing COVID-19 pandemic, including the transmission and presence of highly contagious variants, (ii) changes in oil and gas inventories, (iii) industry demand, and (iv) potential future disagreements among OPEC+ countries regarding the supply of oil, and therefore, the Company cannot predict how long oil and gas prices will 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 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.

Agreements with Aquadrill

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 Aquadrill LLC, formerly known as Seadrill Partners LLC ("Aquadrill"), pursuant to which certain subsidiaries of VHI (the “VHI Entities”) will provide operating, management and marketing services to Aquadrill and its subsidiaries (the “Aquadrill Entities”) in respect of four deepwater floaters owned by the Aquadrill 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 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.

In connection with the entry into the Operations, 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 cash management services to the Aquadrill Entities in respect of the management of the vessels subject to, and covered by, 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.

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 “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 Sheet. The transactions contemplated by the Purchase and Sale Agreement closed on March 10, 2021. Pursuant to the Purchase and Sale Agreement, the Buyer is required to recycle the rig in an environmentally sound manner.

Letter of Award for the Platinum Explorer

10

On February 3, 2021, our ultra-deepwater drillship, the Platinum Explorer, received a letter of award for a two-year contract from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer is currently performing under an existing three-year contract with ONGC, which is expected to close in the third quarter of 2021, and it will experience some brief out-of-service time for planned maintenance after the existing contract expires. The new contract with ONGC is expected to commence shortly thereafter.

2. Basis of Presentation and Significant Accounting Policies

Basis of Consolidation: The accompanying interim consolidated financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 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 VIEs (as discussed 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 U.S. 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, 2020 is derived from our December 31, 2020 audited consolidated 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, 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 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.

ADVantage is a joint venture company formed to operate deepwater drilling rigs in Egypt. We determined that ADVantage met the criteria of 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 leading offshore and onshore provider of oil and 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 benefits that could be potentially significant to the VIE. As a result, we consolidate ADVantage in our consolidated financial statements, we eliminate intercompany transactions and we present the interests that are not owned by us as “Noncontrolling interests” in our Consolidated Balance Sheets. The carrying amount associated with ADVantage was as follows:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	4,152	$	7,072
Non-current assets		87		84
Current liabilities		918		3,979
Non-current liabilities		949		741
Net carrying amount	$	2,372	$	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 evaluate our estimates, including those related to property and equipment, income taxes, insurance, employee benefits and contingent liabilities. Actual results could differ from these estimates.

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.

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Materials and Supplies: Consists of materials, spare parts, consumables and related supplies for our drilling rigs. We record these materials and supplies at their average cost.

Property and Equipment: Consists 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 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 balance sheet and the resulting gain or loss is included in “Operating costs” or “General and administrative” expenses on the Consolidated Statement of Operations, depending on the nature of the asset. In the six months ended June 30, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three months ended June 30, 2021 and the three and six months ended June 30, 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 be computed as 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 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 drilling rigs, depends on the level of our customers’ expenditures for oil and gas exploration, development and production expenditures. Oil and 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 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 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. The projections and assumptions used during the fourth quarter of 2020 have not changed significantly as of June 30, 2021; accordingly, no triggering event has occurred to indicate that the 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 capitalize any interest for the reported periods.

Debt Financing Costs: Costs incurred with financing debt 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 Sheets as a direct deduction from the carrying amount of that debt liability.

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

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expected credit losses unless current or forecasted future conditions for customers (or customer groups) indicate that risk characteristics have changed. We 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 the COVID-19 Pandemic, Including on the Oil and Gas Industry” 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 each of June 30, 2021 and December 31, 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.

Earnings (loss) per Share: We compute basic and diluted EPS in accordance with the two-class method. We include restricted stock units granted to employees and directors 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 ordinary share equivalents outstanding in the applicable period, as if all potentially dilutive securities were converted into Ordinary Shares (using the treasury stock method).

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Weighted average Ordinary Shares outstanding for basic EPS		13,115		13,115		13,115		13,115
Restricted share equity awards		—		—		—		—
Adjusted weighted average Ordinary Shares outstanding for diluted EPS		13,115		13,115		13,115		13,115

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Restricted share equity awards		218		200		218		200
Future potentially dilutive Ordinary Shares excluded from diluted EPS		218		200		218		200

Functional Currency: We consider USD to be the functional currency for all of our operations since the majority of our revenues and 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 three and six months ended June 30, 2021, we recognized a net loss of approximately $0.2 million and $0.8 million, respectively, related to currency exchange rates. The foreign exchange gain/loss for the three months ended June 30, 2020 related to currency exchange rates was immaterial. For the six months ended June 30, 2020, we recognized a net gain of approximately $0.1 million related to 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 balance sheet principally due to the short-term nature or floating rate nature of these instruments. As of June 30, 2021, the fair value of the 9.25% First Lien Notes was approximately $302.3 million 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.

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.

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Recently Adopted Accounting Standards:

In December 2019, the FASB issued ASU No. 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

The activities that primarily drive the revenue earned in our drilling contracts with 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 satisfied over time and comprised of a series of distinct time increments, or service periods. We have elected to exclude from the transaction price measurement all taxes assessed by a governmental authority.

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. In such cases, this may result in cumulative-effect adjustments to demobilization revenues upon changes in our estimates of future events during the contract term. 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.

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Disaggregation of Revenue

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

	Three Months Ended June 30, 2021								Three Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	17,473	$	8,968	$	497	$	26,938	$	14,722	$	15,047	$	252	$	30,021
Amortized revenue		5,214		—		—		5,214		771		2,611		—		3,382
Reimbursable revenue		2,400		311		738		3,449		949		2,341		82		3,372
Total revenue	$	25,087	$	9,279	$	1,235	$	35,601	$	16,442	$	19,999	$	334	$	36,775
	Six Months Ended June 30, 2021								Six Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	26,371	$	17,795	$	595	$	44,761	$	38,708	$	34,778	$	798	$	74,284
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		5,214		—		—		5,214		867		3,117		—		3,984
Reimbursable revenue		4,722		332		738		5,792		4,174		4,896		417		9,487
Total revenue	$	36,307	$	18,127	$	1,333	$	55,767	$	44,225	$	42,791	$	1,215	$	88,231

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	3,169	$	2,905
Noncurrent contract cost assets		304		—
Current contract revenue assets		1,234		—
Current contract revenue liabilities		14,406		5,100

Significant changes in contract cost assets and contract revenue liabilities during the six months ended June 30, 2021 are as follows:

	Contract Cost Assets			Contract Revenue Assets		Contract Revenues
(unaudited, in thousands)
Balance as of December 31, 2020	$	2,905		$	—	$	5,100
Increase (decrease) due to contractual changes		3,758			1,234		13,326
Decrease due to recognition of revenue		(3,190	)		—		(4,020	)
Balance as of June 30, 2021 (1)	$	3,473		$	1,234	$	14,406

(1)We expect to recognize contract revenues of approximately $10.6 million during the remaining six months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of June 30, 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

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single performance obligation consisting of a series of distinct hourly increments, the variability of which will be 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 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 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 calculation of lease liability and ROU assets.

The components of lease expense were as follows:

		Three Months Ended June 30,						Six Months Ended June 30,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020			2021			2020
Operating lease cost(1)	Operating costs	$	713		$	831		$	1,615		$	1,797
Operating lease cost(1)	General and administrative		151			151			303			303
Sublease income	Operating costs		(121	)		(121	)		(242	)		(242	)
Sublease income	General and administrative		(62	)		(62	)		(124	)		(124	)
Total operating lease cost		$	681		$	799		$	1,552		$	1,734

(1)  Short-term lease costs were approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2021, respectively, and $0.1 million and $0.3 million during the three and six months ended June 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

(unaudited, in thousands)	Classification in the Consolidated Balance Sheet	June 30, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	3,144	$	3,997
Total leased assets		$	3,144	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,927	$	2,038
Noncurrent operating	Other long-term liabilities		1,596		2,371
Total lease liabilities		$	3,523	$	4,409

As of June 30, 2021, maturities of lease liabilities were as follows:

(unaudited, in thousands)	Operating Leases
Remaining six months of 2021	$	1,172
2022		1,713
2023		949
2024		—
2025		—
Total future lease payments	$	3,834
Less imputed interest		(311	)
Present value of lease obligations	$	3,523

As of June 30, 2021, the weighted average discount rate and the weighted average remaining lease term for operating leases was 9.25% and 1.92 years, respectively. ROU assets and lease liabilities recorded for leases commencing during the three months ended June 30, 2021 was $0.3 million.

The bareboat charter contract on the Soehanah jackup rig was accounted for as an operating lease with charter revenue included in “Reimbursables and other” in the Consolidated Statement of Operations for the six months ended June 30, 2020. In May 2019, the parties to the bareboat charter terminated the charterer’s right to acquire the rig at the end of the term of the bareboat charter, which was originally intended to end on December 31, 2019. However, under the terms of the bareboat charter, the lease term continued until the rig was redelivered to the Company, which occurred on February 3, 2020.

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5. Debt

Our debt was composed of the following as of the dates indicated:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
9.25% First Lien Notes, net of financing costs of $3,962 and $4,781, respectively	$	346,038	$	345,219
Less current maturities of long-term debt		—		—
Long-term debt, net	$	346,038	$	345,219

9.25% First Lien Notes. On November 30, 2018, the Company issued $350.0 million in aggregate principal amount of 9.25% First Lien Notes in a private placement. The 9.25% First Lien Notes were issued at par and are fully guaranteed 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 assets of the Company and its subsidiaries, in each case subject to certain exceptions. The 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 November 15, 2023 and bear interest from the date of their issuance at the rate of 9.25% per year. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months and is payable semi-annually in arrears, commencing on May 15, 2019.

The First Lien Indenture 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.

The net proceeds from the issuance were used (i) to repay all obligations under the formerly existing 2016 Term Loan Facility and to terminate the credit agreement governing such facility, (ii) to redeem all the then-outstanding 10% Second Lien Notes, (iii) to fund the remaining amounts to be paid in connection with the purchase of the Soehanah jackup rig, (iv) to pay fees and expenses related to the foregoing and 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 formerly existing under the 2016 Term Loan Facility. The facility has a capacity of $50.0 million, with all outstanding letters of credit being cash collateralized. We have issued $11.0 million in letters of credit under this facility as of June 30, 2021.  

6. Shareholders’ Equity

Stock Issuance

VDI has 50,000,000 authorized Ordinary Shares. Upon emergence from bankruptcy on the Effective Date, VDI issued 5,000,053 Ordinary Shares in connection with the settlement of Liabilities Subject to Compromise in accordance with the Reorganization Plan and the VDC Note. On December 4, 2019, VDI issued an additional 8,114,977 Ordinary Shares to convert all of the outstanding Convertible Notes. As of June 30, 2021, 13,115,026 Ordinary Shares were issued and outstanding.

Share-based Compensation  

 On August 9, 2016, the Company adopted the 2016 Amended 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.

No awards were granted to employees or directors during the six months ended June 30, 2021 and 2020. During the six months ended June 30, 2021, 18,224 of previously granted TBGs vested.

Both the TBGs and PBGs are classified as equity awards. For the six months ended June 30, 2021 and 2020, we recognized share-based compensation expense related to the TBGs of approximately $0.3 million and $1.0 million, respectively. As of June 30, 2021, we concluded that it was not probable that the TEV performance condition would be met and therefore, no 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 Sheets at June 30, 2021 to be paid upon settlement of the TBGs.

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7. Income Taxes

VDI is a Cayman Islands company operating in multiple countries through its subsidiaries. The Cayman Islands do not impose corporate income taxes. Consequently, we have calculated income taxes based on the laws and tax rates in effect in the countries in which operations are conducted, or in which we and our subsidiaries are considered resident for income tax purposes. Our income taxes are generally dependent upon the results of our operations and when we generate significant revenues in jurisdictions where the income tax liability is based on gross revenues or asset values, there is no correlation to the net operating results and the income tax expense. Furthermore, in some jurisdictions we do not pay taxes, pay taxes at lower rates or receive benefits for certain income and expense items, including interest expense, loss on extinguishment of debt, gains or losses on disposal or transfer of assets, reorganization expenses and write-off of development costs.

On January 22, 2020, VDI filed the Tax Election with the IRS 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. As a result, U.S. Holders are required to take into account their allocable share of items of income, gain, loss deduction and credit of VDI for each taxable year of VDI ending with or within the U.S. Holder’s taxable year, regardless of whether any distribution has been or will be received from VDI. Each item generally will have the same character and source (either U.S. or foreign) as though the U.S. Holder had realized the item directly. VDI’s change in tax status has not had a material impact on our consolidated financial statements as of June 30, 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted, a sweeping stimulus bill intended to bolster the U.S. economy and provide emergency financial assistance to qualifying businesses and individuals. The CARES Act, among other things, modified the net operating losses carryovers and carrybacks rules, and included modifications to Section 163(j) of the Code to increase the allowable business interest deduction.  On December 27, 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was enacted as part of the Consolidated Appropriations Act, 2021, followed by the American Rescue Plan Act on March 1, 2021. These recent laws, among other provisions, expand and extend the refundable employee retention tax credits previously made available under the CARES Act. As of June 30, 2021, our analysis of the provisions of the CARES Act revealed no material implications on the income tax provision.

Deferred income tax assets and liabilities are recorded for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. We provide for deferred taxes on temporary differences between the financial statements and tax bases of assets and liabilities using the enacted tax rates which are expected to apply to taxable income when the temporary differences are expected to reverse. Deferred tax assets are also provided for certain tax losses and tax credit carryforwards. A valuation allowance is established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. We do not establish deferred tax liabilities for certain of our foreign earnings that we intend to indefinitely reinvest to finance foreign activities.

In certain jurisdictions we are taxed under preferential tax regimes, which may require our compliance with specified requirements to sustain the tax benefits. We believe we are in compliance with the specified requirements and will continue to make all reasonable efforts to comply; however, our ability to meet the requirements of the preferential tax regimes may be affected by changes in laws or administrative practices, our business operations and other factors affecting the Company and industry, many of which are beyond our control.

Our periodic tax returns are subject to examination by taxing authorities in the jurisdictions in which we operate in accordance with the normal statute of limitations in the applicable jurisdiction. These examinations may result in assessments of additional taxes that are resolved with the authorities or through the courts. Resolution of these matters involves uncertainties and there are no assurances as to the outcome. Our tax years from 2011 onward remain open to examination in many of our jurisdictions and we are currently involved in several tax examinations in jurisdictions where we are operating or have previously operated. As information becomes available during the course of these examinations, we may increase or decrease our estimates of tax assessments and accruals.

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.

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 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, and Mr. Hsin-Chi Su, a former member of VDC’s board of 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 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

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Federal Court dismissed our preliminary statement of defense. On October 5, 2020, we subsequently filed a motion to clarify with the Brazilian Federal Court requesting the reconsideration of 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 interlocutory appeal to the 4th Circuit of the 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, 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. On May 13, 2021, the Brazilian Appellate Court’s reporting judge for our matter granted our request for preliminary relief and ordered an immediate stay of the Improbity Action as it applies to the Company until the judgment (on the merits) of the interlocutory appeal is rendered by the full three judge panel of the Brazilian Appellate Court. We will be obligated to file a statement of defense in the matter if the decision to stay the Improbity Action is later reversed. 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 $21.4 million, changes in the U.S. dollar amounts result from foreign exchange rate fluctuations), 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 other three defendants in the legal proceeding, as a precautionary measure, in the amount of approximately $85.6 million. The Company and the other three defendants 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 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 the Brazilian Federal Prosecutor had previously requested mutual legal assistance from the U.S. DOJ pursuant to 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 $85.6 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 interlocutory appeal with the Brazilian Appellate Court to stay the seizure and freezing order of the Brazilian Federal Court.

On May 20, 2019, the Company announced that the Brazilian Appellate Court's reporting judge 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 communicated the Brazilian Appellate Court’s ruling to the DOJ, has asked the Brazilian Federal Court to do the same. On July 18, 2019, the Company announced that the Brazilian Government made a filing with the Brazilian Federal Court reporting that the DOJ has 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 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 concluded.

The Company intends to continue to vigorously defend against the allegations made in the Improbity Action. However, we can neither predict the ultimate outcome of this matter nor that there will not be further developments in the “Car Wash” investigation or in any other ongoing investigation or related proceeding that could adversely affect us. At this time, we are not yet able to determine the likelihood of loss, if any, arising from this matter.

Restructuring Agreement and the 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 VDC, we and the Joint Official Liquidators, appointed to oversee the liquidation of VDC, 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. On March 4, 2020, we, and our subsidiaries on the one hand, and VDC and their subsidiaries, on the other, entered into a settlement agreement pursuant to 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 the Court of Grand Cayman. On March 16, 2020, the 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 six months ended June 30, 2020.

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9. Supplemental Financial Information

Prepaid Expenses and Other Current Assets

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable	$	5,721	$	6,797
Assets held for sale (1)		—		10,113
Other receivables		677		1,517
Income tax receivable		1,553		826
Prepaid insurance		1,302		386
Current deferred contract costs		3,169		2,905
Current contract asset		1,234		—
Other		6,556		6,607
	$	20,212	$	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 as of the dates indicated:  

	June 30, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	776,507		$	774,813
Assets under construction		1,463			561
Office and technology equipment		18,405			18,405
Leasehold improvements		703			1,165
		797,078			794,944
Accumulated depreciation		(306,337	)		(278,562	)
Property and equipment, net	$	490,741		$	516,382

Other Assets

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	5,165	$	4,546
Deferred certification costs		5,382		4,535
Deferred income taxes		1,818		1,923
Other noncurrent assets		2,950		1,122
	$	15,315	$	12,126

Other Current Liabilities

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	4,136	$	4,139
Compensation (1)		3,754		7,128
Income taxes payable		5,272		2,951
Current deferred revenue		14,406		5,100
Current portion of operating lease liabilities		1,927		2,038
Other		3,077		3,378
	$	32,572	$	24,734

(1)  Includes $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.

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Other Long-term Liabilities

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	1,101	$	970
2016 MIP - Dividend Equivalents (1)		8,765		8,006
Noncurrent operating lease liabilities		1,596		2,371
Other non-current liabilities		2,509		3,664
	$	13,971	$	15,011

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

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statement of Cash Flows as of the dates indicated:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Cash and cash equivalents	$	111,424	$	141,945
Restricted cash		7,800		7,996
Restricted cash included within Other Assets		5,165		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	124,389	$	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 June 30, 2021, the total outstanding amount due to ADES for such excess cash contributions was approximately $715,000, 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 June 30, 2021, accounts payable to ADES totaled approximately $0.4 million, included in “Accounts payable,” on the Consolidated Balance Sheet. There were no outstanding accounts receivable from ADES as of June 30, 2021.

We did not have any related party transactions that were not conducted in the ordinary course of business as of June 30, 2021.

10. Business Segment and Significant Customer Information

We aggregate our contract drilling operations into one reportable 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, preservation management services when stacked and operations and marketing services for operating and stacked rigs. Our management business (excluding reimbursable revenue) represented 1% of our total revenue for the three and six months ended June 30, 2021, respectively, and less than 1% of the total revenue for the three and six months ended June 30, 2020, respectively.

For the three and six months ended June 30, 2021 and 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. Three customers accounted for approximately 46%, 26% and 17% of consolidated revenue for the three months ended June 30, 2021 and four customers accounted for approximately 33%, 29%, 16% and 11% of consolidated revenue for the six months ended June 30, 2021. Four customers accounted for approximately 29%, 25%, 16% and 13% of consolidated revenue for the three months ended June 30, 2020, and five customers accounted for approximately 21%, 19%, 14%, 10% and 10% of the consolidated revenue for the six months ended June 30, 2020.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
(unaudited, in thousands)
India	$	9,297	$	9,203	$	18,152	$	18,884
Montenegro		16,253		—		16,306		—
Qatar		7,697		—		14,894		8,975
Indonesia		—		5,834		—		—
Congo		—		4,852		—		12,433
Gabon		—		—		—		9,133
Lebanon		—		10,816		—		17,121
Other countries (1)		2,354		6,070		6,415		21,685
Total revenues	$	35,601	$	36,775	$	55,767	$	88,231

(1)  “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 as of the dates indicated (as of dates representing property and equipment of less than 10% are included in “Other countries”): 

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Mediterranean	$	182,083	$	225,484
India		104,160		111,485
Indonesia		66,454		69,434
Other countries (1)		138,044		109,979
Total property and equipment	$	490,741	$	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 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.

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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 as of June 30, 2021 and our results of operations for the three and six months ended June 30, 2021 and 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, 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.

Overview

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 gas wells for our customers. Through our fleet of drilling units, we provide 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 operations 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.

The following table sets forth certain current information concerning our offshore drilling fleet as of August 2, 2021:

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	Equatorial Guinea	Operating
Aquamarine Driller	2009		375		30,000	Malaysia	Operating
Topaz Driller	2009		375		30,000	Montenegro	Operating
Soehanah	2007		375		30,000	Indonesia	Operating
Drillships (1)
Platinum Explorer	2010		12,000		40,000	India	Operating
Tungsten Explorer	2013		12,000		40,000	Mediterranean	Warm stacked

(1)The drillships are designed to drill in up to 12,000 feet of water. The Platinum Explorer and Tungsten Explorer are currently equipped to drill in 10,000 feet of water.

Recent Developments

Ongoing Impact of the COVID-19 Pandemic, Including on the Oil and Gas Industry

The COVID-19 pandemic continues to spread worldwide and has exacerbated since the World Health Organization (the "WHO") first classified the COVID-19 outbreak as a pandemic in March 2020. The global spread of COVID-19, including its highly contagious variants and sub-lineages, have caused and continue 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, being forced to implement multiple and recurrent shelter-in-place and stay-at-home orders. These governmental responses 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.  

We experienced significant challenges in 2020 when the COVID-19 pandemic began such as: (i) lower revenue due to terminations of (or amendments to) our existing drilling contracts; and (ii) increased expenses due to higher labor and related costs.  The Company actively managed and continues to manage the business in an attempt to mitigate any further impact from the continued presence of the COVID-19 pandemic; however, 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.

There has been a relatively strong recovery in global oil prices for the first half of 2021 (as compared to 2020) and our management remains cautiously optimistic with respect to the potential for the recovery to continue. However, oil and gas prices are expected to continue to be volatile as a result of (i) the ongoing COVID-19 pandemic, including the transmission and presence of highly contagious variants, (ii) changes in oil and gas inventories, (iii) industry demand, and (iv) potential future disagreements among OPEC+ countries regarding the supply of oil, and therefore, we cannot predict how long oil and gas prices will 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 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.

Agreements with Aquadrill

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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 Aquadrill LLC formerly known as Seadrill Partners LLC (“Aquadrill”) pursuant to which certain subsidiaries of VHI (the “VHI Entities”) will provide operating, management and marketing services to Aquadrill and its subsidiaries (the “Aquadrill Entities”) in respect of four deepwater floaters owned by the Aquadrill 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 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.

In connection with the entry into the Operations, 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 cash management services to the Aquadrill Entities in respect of the management of the vessels subject to, and covered by, 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.

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 “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 Sheet. The transactions contemplated by the Purchase and Sale Agreement closed on March 10, 2021. Pursuant to the Purchase and Sale Agreement, the Buyer is required to recycle the rig in an environmentally sound manner.

Letter of Award 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 from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer is currently performing under an existing three-year contract with ONGC, which is expected to close in the third quarter of 2021, and it will experience some brief out-of-service time for planned maintenance after the existing contract concludes. The new contract with ONGC is expected to commence shortly thereafter.

Business Outlook

Expectations about future oil and gas prices have historically been a key driver of demand for our services. Against the backdrop of already challenging industry conditions since 2015, the initial onset, and continued global spread of the COVID-19 pandemic and the resulting collapse in 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 improvements experienced by the industry in 2019. These reductions and delays led to a substantial drop in oil prices and demand for offshore drilling services globally, including for our services, during, and subsequent to, the second quarter of 2020. Global oil prices have experienced a relatively stronger recovery in the first half of 2021 as compared to the low prices experienced in 2020 due to, among other things, the (i) OPEC+ countries’ agreement since last year to reduce production by almost 10 million barrels per day, representing approximately 10% of the world's output compared with demand for approximately 96 million barrels a day, followed by gradual increases in production since that time to address increases in demand, (ii) development, efficacy, availability and utilization of vaccines for COVID-19, (iii) growing confidence in, and the perception of, the reopening of global economies, and (iv) injection of substantial government monetary and fiscal stimulus. The volatility and uncertainty surrounding global oil prices largely remain as the spread of the COVID-19 pandemic and its highly transmissible variants persist. While OPEC+ countries entered into an agreement in July 2021 to gradually phase out certain oil production cuts by September 2022, the long-term commitment of such countries to continue oil production cuts remains uncertain. As a result of such volatility and uncertainty, it has been difficult, and will generally continue to be difficult, for operators to develop and set their capital budget programs for the near and long-term.

In addition to the macroeconomic challenges, including those set forth above, which have led to reduced demand for drilling rigs, the excess supply of delivered and new-build rigs continues to be an overhang on the market. According to industry reports, there are currently 50 jackups and 24 deepwater/harsh environment floaters on order at 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 or (ii) been canceled entirely.

In response to an oversupply of drilling rigs, a number of our competitors began removing older, less competitive, rigs from their fleets by either cold stacking the drilling rigs or taking them permanently out of service. According to industry reports, this trend accelerated since the second quarter of 2020, as 67 rigs (in the aggregate) were removed from the drilling fleet in 2020 and 2021, and a total of 326 rigs have been removed from the drilling fleet since the oil price decline in 2014. We expect further rig 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 demand, we do not, however, anticipate that the reduction in the supply of offshore drilling rigs alone will be sufficient to materially improve, and ultimately offset the impact of, existing market conditions.

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In addition to the expected increase in recycling, many offshore drillers with significant levels of debt on their balance sheets have recently completed, are currently 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 continued and demonstrable improvement in 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 to mitigate the risks and costs of stacking and reactivating rigs and to benefit from the fact that customers had generally favored operating rigs over reactivated cold-stacked rigs. Prior to the COVID-19 pandemic, 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 pandemic, 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 pandemic, economic activity in certain portions of the world has improved during the first half of 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 reached relatively healthier levels in 2021. As a result, the jackup segment has experienced greater recovery as compared to the deepwater segment, where such recovery has generally lagged as compared to the shallow water segment.  This recovery timing 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 and any uncertainty regarding the direction of oil prices and rate of recovery could weigh significantly on these decisions. However, to the extent that 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 more 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 and its highly transmittable variants and sub-lineages. Though with the COVID-19 pandemic unlikely to subside in the near term, the possibility exists that the world learns to operate in and further adapt to the current environment for the foreseeable future. Volatility in global oil and gas prices and how our industry manages the logistical challenges stemming from the pandemic will continue to play a significant role in determining the outlook for the industry.

Backlog

The following table reflects a summary of our contract drilling backlog coverage of days contracted and related revenue as of June 30, 2021 based on information available as of that date:

	Percentage of Days Contracted					Revenues Contracted (1) (in thousands)
	2021	2022	Beyond			2021		2022		Beyond
Jackups	73%	25%		7	%	$	53,930	$	29,200	$	8,379
Drillships	48%	62%		42	%	$	25,717	$	67,188	$	45,091

(1)Includes contract(s) with operating day rates that may vary based on a variable oil price index rate mechanism calculated utilizing the then applicable average price of Brent crude. For purposes of calculating the backlog with contracts that contain a variable oil price indexed rate mechanism we utilize the applicable oil price as of quarter end multiplied by the number of days remaining in the firm contract period. The average dayrate over the term of 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.

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Results of Operations

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:  

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Jackups
Rigs available (at end of period)		5			5			5			5
Available days (1)		455			455			905			875
Utilization (2)		39.9	%		60.0	%		35.3	%		73.9	%
Average daily revenues (3)	$	124,857		$	56,710		$	98,775		$	61,194
Deepwater
Rigs available		2			3			2			3
Available days (1)		182			273			362			546
Utilization (2)		49.7	%		45.6	%		49.4	%		53.7	%
Average daily revenues (3)	$	99,194		$	141,900		$	99,549		$	129,255

(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.

(2)Utilization is calculated as a percentage of the actual number of revenue earning days divided by the available days in the period. A revenue earning day is defined as a day for which a rig earns dayrate after commencement of operations.

(3)Average daily revenues are based on contract drilling revenues divided by revenue earning days. Average daily revenue will differ from average contract dayrate due to billing adjustments for any non-productive time, mobilization fees and demobilization fees.

For the Three Months Ended June 30, 2021 and 2020

Net loss attributable to shareholders for the Current Quarter was $29.0 million, or $2.21 per basic share, on operating revenues of $35.6 million, compared to net loss attributable to shareholders for the Comparable Quarter of $31.9 million, or $2.43 per basic share, on operating revenues of $36.8 million.

The following table is an analysis of our operating results for the three months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Change
	2021			2020			$			%
(unaudited, in thousands)
Revenues
Contract drilling services	$	31,655		$	33,151		$	(1,496	)		-5	%
Reimbursables and other		3,946			3,624			322			9	%
Total revenues		35,601			36,775			(1,174	)		-3	%
Operating costs and expenses
Operating costs		36,056			38,104			(2,048	)		-5	%
General and administrative		4,967			4,716			251			5	%
Depreciation		14,161			18,401			(4,240	)		-23	%
Total operating costs and expenses		55,184			61,221			(6,037	)		-10	%
Loss from operations		(19,583	)		(24,446	)		4,863			-20	%
Other (expense) income
Interest income		10			111			(101	)		-91	%
Interest expense and financing charges		(8,511	)		(8,601	)		90			-1	%
Other, net		(179	)		12			(191	)		-1592	%
Total other expense		(8,680	)		(8,478	)		(202	)		2	%
Loss before income taxes		(28,263	)		(32,924	)		4,661			-14	%
Income tax (benefit) provision		720			(1,024	)		1,744			-170	%
Net loss		(28,983	)		(31,900	)		2,917			-9	%
Net income (loss) attributable to noncontrolling interests		(18	)		12			(30	)		-250	%
Net loss attributable to shareholders	$	(28,965	)	$	(31,912	)	$	2,947			-9	%

Revenue: Total revenue decreased $1.2 million due primarily to the decrease in operating activities in the Current Quarter.

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Contract drilling revenue decreased $1.5 million for the Current Quarter as compared to the Comparable Quarter. The decrease in our contract drilling revenue for the Current Quarter as compared to the Comparable Quarter was primarily the result of the number of rigs that were operational, with four in the Current Quarter as compared to seven in the Comparable Quarter due to the fact that: (i) three of our drilling contracts were terminated in the second quarter of 2020 as a result of the volatility in oil prices and the challenges presented by the COVID-19 pandemic; and (ii) another drilling contract expired in the second quarter of 2020 in accordance with its term These decreases were offset by contract amendments which resulted in higher dayrates in the Current Quarter as compared to lower dayrates in the Comparable Quarter.

Reimbursables and other revenue for the Current Quarter increased 9% as compared to the Comparable Quarter as a result of higher reimbursable revenue on the Emerald Driller and Topaz Driller as well as reimbursables and other revenue related to the management of the Aquadrill rigs we began managing during the first quarter of 2021.

Operating costs: Operating costs for the Current Quarter decreased $2.0 million as compared to the Comparable Quarter. The decrease in Operating costs was primarily the result of changes to our drilling contracts, which resulted in four of our rigs being operational during in the Current Quarter, with lower costs incurred on warm stacked rigs. Decreases in Operating costs in the Current Quarter were further impacted by the sale of the Titanium Explorer on March 10, 2021.

General and administrative expenses: Increases in general and administrative expenses for the Current Quarter as compared to the Comparable Quarter were primarily due to higher professional fees and insurance. General and administrative expenses for the Comparable Quarter included approximately $0.2 million for non-cash share-based compensation expense. Non-cash share-based compensation expense for the Current Quarter was immaterial.

Depreciation expense: Depreciation expense for the Current Quarter decreased 23% as compared to the Comparable 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 $0.1 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 financing charges: Interest expense for the Current Quarter decreased 1% as compared to the Comparable Quarter. Interest expense includes non-cash deferred financing costs totaling approximately $0.4 million for the Current Quarter and for the Comparable Quarter, respectively.

Our functional currency is USD; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than USD. These transactions are re-measured in USD based on a combination of both current and historical exchange rates. Net foreign currency exchange loss of approximately $0.2 million was included in “other, net,” for the Current Quarter. The foreign currency exchange gain/loss for the Comparable Quarter was immaterial.

Income tax provision: Our annualized effective tax rate for the Current Quarter is negative 7.06% based on estimated annualized loss before income taxes excluding income tax discrete items. Our annualized effective tax rate for the Comparable Quarter was negative 4.58%, based on estimated annualized loss before income taxes excluding income tax discrete items.

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 and disposal gains or losses. In other jurisdictions, we recognize income taxes on a net income basis or a deemed profit basis.

For the Six Months Ended June 30, 2021 and 2020

Net loss attributable to shareholders for the Current Period was $64.9 million, or $4.95 per basic share, on operating revenues of $55.8 million, compared to net loss attributable to shareholders for the Comparable Period of $62.5 million, or $4.76 per basic share, on operating revenues of $88.2 million.

The following table is an analysis of our operating results for the six months ended June 30, 2021 and 2020:

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	Six Months Ended June 30,						Change
	2021			2020			$			%
(unaudited, in thousands)
Revenues
Contract drilling services	$	49,380		$	77,470		$	(28,090	)		-36	%
Reimbursables and other		6,387			10,761			(4,374	)		-41	%
Total revenues		55,767			88,231			(32,464	)		-37	%
Operating costs and expenses
Operating costs		61,413			86,659			(25,246	)		-29	%
General and administrative		10,462			11,886			(1,424	)		-12	%
Depreciation		28,286			36,417			(8,131	)		-22	%
Total operating costs and expenses		100,161			134,962			(34,801	)		-26	%
Loss from operations		(44,394	)		(46,731	)		2,337			-5	%
Other (expense) income
Interest income		110			812			(702	)		-86	%
Interest expense and financing charges		(17,021	)		(17,021	)		-			0	%
Other, net		(793	)		2,367			(3,160	)		-134	%
Total other expense		(17,704	)		(13,842	)		(3,862	)		28	%
Loss before income taxes		(62,098	)		(60,573	)		(1,525	)		3	%
Income tax provision		2,882			1,897			985			52	%
Net loss		(64,980	)		(62,470	)		(2,510	)		4	%
Net income (loss) attributable to noncontrolling interests		(31	)		14			(45	)		-321	%
Net loss attributable to shareholders	$	(64,949	)	$	(62,484	)	$	(2,465	)		4	%

Revenue: Total revenue decreased $32.5 million due primarily to a reduction in operating activities in the Current Period.

Contract drilling revenue decreased 36% for the Current Period as compared to the Comparable Period. The decrease in our contract drilling revenue for the Current Period as compared to the Comparable Period was primarily a result of the number of rigs that were operational (with four rigs operational in the Current Period as compared to seven rigs in the Comparable Period) due to the fact that: (i) three of our drilling contracts were terminated in the second quarter of 2020 as a result of the volatility in oil prices and the challenges presented by the COVID-19 pandemic; and (ii) another drilling contract expired in the second quarter of 2020 in accordance with its terms. These decreases were offset by contract amendments which resulted in higher dayrates in the Current Period as compared to lower dayrates in the Comparable Period. 

Reimbursables and other revenue for the Current Period decreased $4.4 million as compared to the Comparable Period as a result of (i) the changes in our drilling contracts (discussed immediately above) and (ii) the Tungsten Explorer, which was not operational in the Current Period.

Operating costs: Operating costs for the Current Period decreased 29% as compared to the Comparable Period. The decrease in operating costs was primarily the result of changes to our drilling contracts which resulted in only four of our rigs operating in the Current Period, with lower costs incurred on warm stacked rigs, and a $1.0 million decrease in operational support costs in the Current Period (as compared to the Comparable Period) as a result of reductions in personnel headcount and salaries paid to personnel. Decreases in Operating costs in the Current Period were further reduced by the sale of the Titanium Explorer on March 10, 2021 and the recognition of a net gain of $2.8 million related to the sale of the asset.    

General and administrative expenses: Decreases in general and administrative expenses for the Current Period as compared to the Comparable Period were primarily due to cost cutting initiatives to reflect the lower levels of operating activity in the Current Period.   General and administrative expenses for the Current Period and for the Comparable Period include approximately $0.2 million and $0.7 million, respectively, for non-cash share-based compensation expense.

Depreciation expense: Depreciation expense for the Current Period decreased 22% as compared to the Comparable Period, due primarily to a $7.6 million decrease in depreciation expense on the Titanium Explorer, which was classified as held for sale as of December 31, 2020.

Interest income: Interest income for the Current Period decreased $0.7 million as compared to the Comparable Period, due primarily to lower interest rates earned on lower cash investments during the Current Period.

Interest expense and financing charges: Interest expense for the Current Period decreased 0% as compared to the Comparable Period. Interest expense includes non-cash deferred financing costs totaling approximately $0.8 million for each of the Current Period and the Comparable Period.

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Other, net: We recorded a gain of $2.3 million during the Comparable Period 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 USD; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than USD. These transactions are re-measured in USD based on a combination of both current and historical exchange rates. Net foreign currency exchange loss of approximately $0.8 million and gain of approximately $0.1 million was included in "Other, net", for the Current Period and the Comparable Period, respectively.

Income tax provision: Our annualized effective tax rate for the Current Period is negative 7.06% based on estimated annualized loss before income taxes excluding income tax discrete items. Our estimated annualized effective tax rate for the Comparable Period was negative 4.58% based on estimated annualized loss before income taxes excluding income tax discrete items.

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 and disposal gains or losses.  In other jurisdictions, we recognize income taxes on a net income basis or a deemed profit basis.

Liquidity and Capital Resources

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 pandemic, as well as other impacts to our long-term liquidity. (see “Ongoing Impact of the COVID-19 Pandemic, Including on the Oil and Gas Industry” of this Part I, Item 2 for further information pertaining to the ongoing impact of the COVID-19 pandemic, including the spread of its highly transmittable variants and sub-lineages, on our operations and financial condition). Governmental measures, such as widespread lock downs, nightly curfews and territorial entry restrictions could impact our ability to operate in locations where such restrictions are in place, including those locations where we maintain significant operations and derive material revenue.  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 further cost reduction measures (in addition to those put in place in 2020 and maintained through the Current Period) and alter our general financial strategy.

As of June 30, 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 June 30, 2021, we had working capital of approximately $161.2 million, including approximately $111.4 million of cash available for general corporate purposes. Scheduled debt service consists of interest payments through June 30, 2022 of approximately $32.4 million. We anticipate capital expenditures through June 30, 2022 to be between approximately $23.4 million and $28.6 million, for sustaining capital and capital spares as a result of upgrades required for upcoming contracts. As our rigs obtain new contracts, we could incur reactivation and mobilization costs for these rigs, as well as additional customer requested equipment upgrades. These costs could be significant and may not be fully recoverable from the customer. Based on our expected levels of activity, incremental expenditures through June 30, 2022 for special periodic surveys, major repair and maintenance expenditures and equipment recertifications to be between approximately $29.7 million and $36.3 million primarily to due to timing of anticipated maintenance that will need to be completed prior to commencement of upcoming contracts. As of June 30, 2021, we had $39.0 million available for the issuance of letters of credit under our cash collateralized letter of credit facility.

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

		Six Months Ended June 30,
(unaudited, in thousands)		2021			2020
Cash flows (used in) provided by:
	Operating activities	$	(40,944	)	$	(52,514	)
	Investing activities		10,846			(2,021	)
	Financing activities		—			—

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

Cash flows from investing activities in the Current Period include net proceeds of $13.6 million from the sale of the Titanium Explorer.

The significant elements of the 9.25% First Lien Notes are described in “Note 5. Debt” of the “Notes to Unaudited Consolidated Financial Statements” in Part I, Item 1 of this 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.

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. Information regarding our legal proceedings is set forth in “Note 8. Commitments and Contingencies” of the “Notes to Unaudited Consolidated Financial Statements” in Part I, Item 1 of this 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.

Critical Accounting Policies and Accounting Estimates

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 discussed the development, selection and disclosure of such policies and estimates with the audit committee of the Board of Directors.

Our critical accounting policies are those related to property and equipment, impairment of long-lived assets and income taxes. For a discussion of the critical accounting policies and estimates that we use in the preparation of our consolidated financial statements, see “Item 7. Management's Discussion and 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 the SEC on March 18, 2021. During the Current Quarter, there were no material changes to the judgments, assumptions or policies upon which our critical accounting estimates are based.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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 since 2014, the continual spread and exacerbation of the COVID-19 pandemic, including as a result of its highly transmittable variants and sub-lineages, 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” of this Quarterly Report.

Interest Rate Risk: As of June 30, 2021, we had no variable rate debt outstanding.

Foreign Currency Exchange Rate Risk: Our functional currency is the USD, which is consistent with the oil and gas industry. However, outside the U.S., a portion of our expenses are incurred in local currencies. Therefore, when the USD weakens (strengthens) in relation to the currencies of the countries in which we operate, our expenses reported in USD will increase (decrease). A substantial majority of our revenues are received in 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

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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 USD payment equal to the value of such exchange. We do not enter into derivative transactions for speculative purposes. As of June 30, 2021, we did not have any open foreign exchange derivative contracts or material foreign currency exposure risk.

Item 4. Controls and Procedures

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 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 June 30, 2021 to provide reasonable assurance that information required to be disclosed on our reports filed or submitted under 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 currently working under a hybrid schedule, with certain days working remotely and other days working in the office due to the spread of the COVID-19 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.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 6. Exhibits

			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

31

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
10.1	Agreement, dated June 20, 2019, among Vantage Deepwater Company, Vantage Deepwater Drilling, Inc., Petroleo Brasileiro S.A., Petrobras America, Inc. and Petrobras Venezuela Investments & Services, BV.		8-K	333-159299-15	10.1	06/24/19
10.2	Second Amended and Restated Employment and Non-Competition Agreement between Offshore Group Investment Limited and Linda J. Ibrahim, dated February 10, 2016	X
31.1	Certification of Principal Executive Officer Pursuant to Section 302	X
31.2	Certification of Principal Financial and Accounting Officer Pursuant to Section 302	X
32.1**	Certification of Principal Executive Officer Pursuant to Section 906
32.2**	Certification of Principal Financial and Accounting Officer Pursuant to Section 906
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101.SCH	Inline XBRL Taxonomy Extension Schema	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase	X
101.DEF	Inline XBRL Taxonomy Extension Definition Inline Linkbase	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase	X

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101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase	X
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document)	X
** These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

33

SIGNATURES

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.

	VANTAGE DRILLING INTERNATIONAL
Date: August 12, 2021	By:	/s/ DOUGLAS E. STEWART
		Douglas E. Stewart
		Chief Financial Officer, General Counsel and Corporate Secretary
		(Principal Financial Officer)

34

EX-10.2

Exhibit 10.2

SECOND AMENDED AND RESTATED
EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (“Agreement”) is entered into as of the 10 day of February, 2016 (the “Effective Date”), between Offshore Group Investment Limited (“Company”), and Linda J. Ibrahim (“Employee” or “Executive”).

RECITALS:

WHEREAS, Vantage Drilling Company and Executive entered into an Employment Agreement dated as of February 1, 2015 (as amended and/or restated, the “Previous Agreement”), providing for Executive’s employment by the Company and setting forth the terms and conditions for such employment; and

WHEREAS, the Company and Executive agree that the Previous Agreement should be amended to replace Vantage Drilling Company as a party to the agreement with the Company and to make such other changes as the Company and Executive agree are necessary and in the Parties’ mutual best interests; and

WHEREAS, the Company and Executive desire to amend and restate the Previous Agreement to reflect the amendments reflected in this Agreement; and

WHEREAS, Executive is employed as an integral part of the Company’s management and participates in the decision-making process relative to short and long-term planning and policy for the Company; and

WHEREAS, the Company desires to obtain assurances from Executive that she will devote her best efforts to the Company and will not enter into competition with the Company, solicit its customers, or solicit employees of the Company after termination of her employment; and

WHEREAS, Executive serves as a key employee with special and unique talents and skills of peculiar benefit and importance to the Company; and

WHEREAS, Executive is desirous of committing herself to serve on the terms herein provided.

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below, the Parties agree to this Agreement as follows:

OFFSHORE GROUP INVESTMENT LIMITED EMPLOYMENT AGREEMENT
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1.EMPLOYMENT TERM AND DUTIES

1.1Term of Employment. Effective as of the Effective Date, the Company hereby agrees to continue to employ Executive as its Vice President of Tax and Governmental Compliance, and Executive hereby agrees to accept such employment, on the terms and conditions set forth herein, for the period commencing on the Effective Date and expiring as of January 31, 2016 (the “Basic Term”) (unless sooner terminated as hereinafter set forth). The Basic Term shall be automatically extended commencing on the first (1st) anniversary date and on each subsequent anniversary date thereafter (each such date being a “Renewal Date”), so as to terminate one (1) year from such Renewal Date, unless and until at least ninety (90) days prior to a Renewal Date either party hereto gives written notice to the other that the Basic Term should not be further extended after the next Renewal Date (a “Notice of Non-Renewal”), in which event the Termination Date shall be the Renewal Date next following receipt of the Notice of Non-Renewal. For the removal of any doubt, unless the Company provides Executive with written notice of its intention not to renew this Agreement at least ninety (90) days prior to the expiration of the Basic Term or before the Renewal Date, this Agreement shall automatically renew for an additional one-year period commencing on the first (1st) day after each anniversary date. The period of time commencing on the Effective Date until the Agreement has been terminated as set forth herein shall be referred to as the “Employment Period.”

1.2Duties as Executive of the Company. Executive shall, subject to the supervision of the Chief Financial Officer, have general management and control of the Company’s tax department in the ordinary course of its business with all such powers with respect to such management and control as may be reasonably incident to such responsibilities. Executive shall devote her full time and attention to diligently attending to the business of the Company during the Employment Period. During the Employment Period, Executive shall not directly or indirectly render any services of a business, commercial, or professional nature to any other person, firm, corporation, or organization, whether for compensation or otherwise, without the prior written consent of the Chairman of the Board. However, Executive shall have the right to (i) serve on corporate, civic or charitable boards or committees, provided that the Board must approve Executive’s service on more than two (2) outside corporate boards, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (iii) engage in such activities as may be appropriate in order to manage her personal investments so long as all such activities do not materially interfere or conflict with the performance of her duties to the Company hereunder. The conduct of such activity shall not be deemed to materially interfere or conflict with Executive’s performance of her duties until Executive has been notified in writing thereof and given a reasonable period in which to cure the same.

1.3Place of Performance. Executive’s place of performance shall be mutually determined by Executive and the Company. During the Employment Period, the Company shall maintain executive offices for Executive in Houston, Texas, or in the location where Executive is assigned if Executive is employed for overseas employment. During the Employment Period, the Company shall provide Executive with an office and staff consistent with the practices of the Company in effect during Executive’s Basic Term of Employment.

1.4Fiduciary Duty. Executive acknowledges and agrees that she owes a fiduciary duty to the Company and further agrees to make full disclosure to the Company of all business opportunities pertaining to the Company’s business and shall not act for her own benefit concerning the subject matter of her fiduciary relationship.

1.5Compliance. Executive agrees that she will not take any action in violation of United States laws or other laws applicable to Executive’s employment, including, but without limited to the Foreign Corrupt Practices Act, the UK Bribery Act of 2010, and the Securities Exchange Act of 1934.

2.COMPENSATION AND RELATED MATTERS

2.1Base Salary. Executive shall receive a base salary (the “Base Salary”) paid by the Company at the annual rate of $220,000 (Two Hundred Twenty Thousand Dollars), payable in accordance with the Company’s general payment practices, but no less frequently than monthly, in substantially equal installments, with the opportunity for increases from time to time thereafter in accordance with the Company’s regular executive compensation practices.

OFFSHORE GROUP INVESTMENT LIMITED EMPLOYMENT AGREEMENT
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0.7Bonus Payments. For each full fiscal year of the Company that begins and ends during the Employment Period, Executive shall be eligible to earn an annual cash bonus in such amount as shall be determined by the Compensation Committee of the Board (the “Compensation Committee”) based on the achievement by the Company and Executive of performance goals established by the Compensation Committee for each such fiscal year; provided, that the “Target Annual Bonus” shall be no less than 70% of Executive’s Base Salary. The Compensation Committee shall establish objective criteria to be used to determine the extent to which performance goals have been satisfied.

0.8Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by her in accordance with the policies and procedures established by the Compensation Committee for the Company’s senior executive officers in performing services hereunder, provided that Executive properly accounts for such expenses in accordance with the Company’s policies and procedures.

0.9Automobiles. The Company shall provide Executive with an automobile allowance of $500 per month, consistent with the practices of the Company.

0.10Business, Travel and Entertainment Expenses. The Company shall promptly reimburse Executive for all business, travel and entertainment expenses consistent with Executive’s titles and the practices of the Company.

0.11Vacation. Executive shall be entitled to four (4) weeks of vacation per year. Vacation not taken during the applicable fiscal year (but not in excess of three weeks) shall be carried over to the next following fiscal year, subject to the Company’s then current practices.

0.12Welfare, Pension and Incentive Benefit Plans. During the Employment Period, Executive (and her eligible spouse and dependents) shall be entitled to participate in all the welfare benefit plans and programs maintained by the Company from time-to-time for the benefit of its senior executives, including, without limitation, all medical, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs. In addition, during the Employment Period, Executive shall be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time-to-time by the Company for the benefit of its senior executives, other than any annual cash incentive plan.

0.13Dues. During the Employment Period, the Company shall pay or promptly reimburse Executive for annual dues for membership in professional organizations, to the extent that such dues are for the purpose of Executive maintaining continuing educational requirements and/or professional licenses directly related to the position in which Executive is employed.

0.14Other Benefits. Executive shall be entitled to participate in or receive benefits under any compensatory employee benefit plan or other arrangement made available by the Company now or in the future (“Other Benefits”) to its senior executive officers and key management employees, subject to and on a basis consistent with the terms, conditions, and overall administration of such plan or arrangement. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the Base Salary payable to Executive pursuant to Section 2.1 of this Agreement. The Company shall not make any changes in any employee benefit plans or other arrangements in effect on the date hereof or subsequently in effect in which Executive currently or in the future participates (including, without limitation, each pension and retirement plan, supplemental pension and retirement plan, savings and profit sharing plan, stock or unit ownership plan, stock or unit purchase plan, stock or unit option plan, life insurance plan, medical insurance plan, disability plan, dental plan, health and accident plan, or any other similar plan or arrangement) that would adversely affect Executive’s rights or benefits thereunder, unless such change occurs pursuant to a program applicable to substantially all executives of the Company and does not result in a proportionately greater reduction in the rights of or benefits to Executive as compared with any other executive of the Company. The Company shall recommend that Executive receive an annual award of restricted stock and/or stock options in the Company equal to 125% of Executive’s Base Salary based on market studies of industry executives, but Executive recognizes and agrees that future years could vary significantly as market conditions and industry compensation trends change and nothing herein shall require the Company or the Board to make any grant in

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any particular amount. If there is a Change of Control (as herein defined), any Stock Awards (as herein defined) which Executive has received under this Agreement, other than the Initial Award (as defined herein), shall vest immediately. The Initial Award shall be governed by the applicable award agreement.

0.15Perquisites. Executive shall be entitled to receive the perquisites and fringe benefits appertaining to an executive officer of the Company, in accordance with any practice established by the Compensation Committee.

0.16Proration. Any payments or benefits payable to Executive hereunder in respect of any calendar year during which Executive is employed by the Company for less than the entire year, unless otherwise provided in the applicable plan or arrangement, shall be prorated in accordance with the number of days in such calendar year during which she is so employed.

0.17Insurance. The Company may, from time to time, apply for and take out, in its own name and at its own expense, naming itself or one or more of its affiliates as the designated beneficiary (which it may change from time to time), policies for life, health, accident, disability or other insurance upon Executive in any amount or amounts that it may deem necessary or appropriate to protect its interest. Executive agrees to aid the Company in procuring such insurance by submitting to medical examinations and by completing, executing and delivering such applications and other instruments in writing as may reasonably be required by an insurance company or companies to which any application or applications for insurance may be made by or for the Company.

3.TERMINATION

0.18Definitions. For purposes of this Agreement, the following terms shall have the indicated meanings:

A.“Anticipatory Termination” shall mean the termination of Executive’s employment by the Company without Cause or by Executive for Good Reason, within the six-month period immediately prior to the date on which a Change of Control occurred, which Change of Control is a “change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation” under Treasury Regulation Section 1.409A-3(i)(5), provided that it is reasonably demonstrated by Executive that such termination of employment was either (i) at the request of a third party who has taken steps reasonably calculated to effect such Change of Control or (ii) otherwise arose in connection with or anticipation of such Change of Control.

B.“Cause” shall mean:

0.0.0.1Material dishonesty which is not the result of an inadvertent or innocent mistake of Executive with respect to the Company or any of its subsidiaries;

0.0.0.2Willful misfeasance or nonfeasance of duty by Executive intended to injure or having the effect of injuring in some material fashion the reputation, business, or business relationships of the Company or any of its subsidiaries or any of their respective officers, directors, or employees;

0.0.0.3Material violation by Executive of this Agreement;

0.0.0.4Commission by Executive of (A) any felony, (B) any crime involving moral turpitude or (C) any crime which would reflect in some material fashion unfavorably upon the Company or any of its subsidiaries, in each case other than a minor vehicular offense; or

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0.0.0.1Violation of Sections 1.4 or 1.5 above.

C.“Change of Control” shall mean, subject to Section 3.8.3 below, a change in control of the Company which results from the occurrence of any one or more of the following events:

i.The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company or any subsidiary, (B) any acquisition by the Company or any subsidiary or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, or (C) any acquisition by any corporation pursuant to a reorganization, merger, consolidation or similar business combination involving the Company (a “Merger”), if, following such Merger, the conditions described in subsection (iv) (below) are satisfied; or

0.0.0.1A reverse merger involving the Company or the parent of the Company (as defined in Section 424(e) of the Internal Revenue Code of 1986, as amended (the “Code”) or an equivalent non-corporate entity (“Parent”), in which the Company or the Parent, as the case may be, is the surviving corporation but the shares of common stock of the Company or the Parent outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, and the shareholders of the Parent immediately prior to the completion of such transaction hold, directly or indirectly, less than fifty percent (50%) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of the surviving entity or, if more than one entity survives the transaction, the controlling entity; or

0.0.0.2Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

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0.0.0.1The effective date of a Merger, unless immediately following such Merger, (A) substantially all of the holders of the Outstanding Company Voting Securities immediately prior to Merger beneficially own, directly or indirectly, more than fifty percent (50%) of the common stock of the corporation resulting from such Merger (or its parent corporation) in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to such Merger, and (B) at least a majority of the members of the board of directors of the corporation resulting from such Merger (or its parent corporation) were members of the Incumbent Board at the time of the execution of the initial agreement providing for such Merger; or

0.0.0.2The sale or other disposition of all or substantially all of the assets of the Company, unless immediately following such sale or other disposition, (A) substantially all of the holders of the Outstanding Company Voting Securities immediately prior to the consummation of such sale or other disposition beneficially own, directly or indirectly, more than fifty percent (50%) of the common stock of the corporation acquiring such assets in substantially the same proportions as their ownership of Outstanding Company Voting Securities immediately prior to the consummation of such sale or disposition, and (B) at least a majority of the members of the board of directors of such corporation (or its parent corporation) were members of the Incumbent Board at the time of execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company; or

0.0.0.3The adoption of any plan or proposal for the liquidation or dissolution of the Company.

Notwithstanding the foregoing provisions of this definition of Change of Control, for purposes of this Agreement other than the vesting of Stock Awards under Sections 2.9 and 3.4.2, a Change of Control shall not be deemed to occur unless such event or events would also be a “change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation” under Treasury Regulation Section 1.409A-3(i)(5).

D.“Disability” shall mean a disability suffered by Executive because she (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.

E.“Good Reason” shall mean any of the following (without Executive’s express written consent):

i.A reduction in Executive’s Base Salary;

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0.0.0.1The failure of the Company to continue to provide Executive with office space, related facilities and secretarial assistance that are commensurate with Executive’s responsibilities to and position with the Company;

0.0.0.2Following a Change of Control, (A) a material adverse alteration in the nature or status of Executive’s title, duties or responsibilities, or (B) the assignment of duties or responsibilities inconsistent with Executive’s status, title, duties and responsibilities;

0.0.0.3A failure by the Company to continue in effect any employee benefit plan in which Executive was participating, or the taking of any action by the Company that would adversely affect Executive’s participation in, or materially reduce Executive’s benefits under, any such employee benefit plan, unless such failure or such taking of any action adversely affects the senior executive officers or key members of corporate management of the Company generally to the same extent;

0.0.0.4For Houston, Texas based executives exclusively, (A) a relocation of the Company’s principal offices exceeding a distance of fifty (50) miles from the Company’s current executive office located in Houston, Texas, or (B) Executive’s relocation to any place other than the principal executive offices, except for reasonably required travel by Executive on the Company’s business;

0.0.0.5The non-renewal, or delivery of any notice of non-renewal, of this Agreement by the Company;

0.0.0.6Any material breach by the Company of this Agreement;

0.0.0.7The failure by the Company to indemnify, pay or reimburse Executive at the time and under circumstances required by this Agreement; or

0.0.0.8Any failure by the Company to obtain the assumption and performance of this Agreement by any successor (by merger, consolidation, or otherwise) or assign of all or substantially all of the Company.

Notwithstanding any other provision of this Agreement, Executive's employment under this Agreement may be terminated during the Employment Period by Executive for Good Reason, if one of the forgoing events shall occur without the written consent of Executive. Any such termination pursuant to this Section shall be made by Executive providing written notice to the Company specifying the event relied upon for such termination and given within sixty (60) days after such event. Any termination pursuant to this Section shall be effective thirty (30) days after the date Executive has given the Company such written notice setting forth the grounds for such termination with specificity. However, Good Reason shall exist with respect to an above specified matter only if such matter is not corrected by the Company within thirty (30) days of its receipt of such written notice of such matter from Executive, and in no event shall a termination by Executive

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more than ninety (90) days following the date of the event described above be a termination for Good Reason due to such event.

F.“Termination Date” shall mean the date Executive is terminated for any reason pursuant to Section 3.9.2 of this Agreement.

0.19Notice to Cure. Executive may not be terminated for Cause unless and until there has been delivered to Executive written notice from the Board supplying the particulars of Executive’s acts or omissions that the Board believes constitute Cause, a reasonable period of time (not less than thirty (30) days) has been given to Executive after such notice to either cure the same or to meet with the Board, with her attorney if so desired by Executive, and following which the Board by action of not less than two-thirds of its members (excluding Executive for purposes of determining such majority) furnishes to Executive a written resolution specifying in detail its findings that Executive has been terminated for Cause as of the date set forth in the notice to Executive.

0.20Good Faith Belief. For purposes of this Agreement, no act or failure to act by Executive shall be considered “willful” if such act is done by Executive in the good faith belief that such act is or was to be beneficial to the Company or one or more of its businesses or subsidiaries or affiliates, or such failure to act is due to Executive’s good faith belief that such action would be materially harmful to the Company or one of its businesses. Executive’s actions resulting in a violation of law, including but not limited to laws specified in Section 1.5, shall not constitute a good faith belief for purposes of this Section or this Agreement. Cause shall not exist unless and until the Company has delivered to Executive a copy of a resolution duly adopted by not less than two-thirds of the Board (excluding Executive for purposes of determining such majority) at a meeting of the Board called and held for such purpose after reasonable (but in no event less than thirty (30) days’) notice to Executive and an opportunity for Executive, together with her counsel, to be heard before the Board, finding that in the good faith opinion of the Board that “Cause” exists, and specifying the particulars thereof in detail. This Section shall not prevent Executive from challenging in an arbitration proceeding the Board’s determination that Cause exists or that Executive has failed to cure any act (or failure to act) that purportedly formed the basis for the Board’s determination.

0.21Termination Without Cause or Termination For Good Reason: Benefits.

If Executive’s employment is terminated either by the Company without Cause, but not because of Executive’s Disability or death, or by Executive for Good Reason, if Executive executes and delivers to the Company a Release Agreement in accordance with Section 3.9.4, Executive shall receive the payments and benefits described in this Section 3.4 unless Executive is entitled to benefits under Section 3.8 below.

0.0.1.Base Salary and Annual Bonus. The Company shall pay Executive an amount equal to the sum of Executive’s annual Base Salary and Target Annual Bonus, which shall be paid in substantially equal installments in accordance with the Company’s normal payroll practices commencing on the sixtieth (60th) day following the Termination Date through the first (1st) anniversary of the Termination Date, provided that the first such payment shall include any amounts that would have otherwise been paid during the period from the Termination Date through the sixtieth (60th) day following the Termination Date.

0.0.2.Stock Awards. If there is a Change of Control, termination without Cause or termination for Good Reason, any equity-based awards under any long-term incentive plans or programs as Company may adopt from time to time (“Stock Awards”)

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which Executive has received shall vest immediately, provided, however, that the foregoing shall not apply to the initial Stock Awards granted to Executive pursuant to the Offshore Group Investment Limited 2016 Management Incentive Plan (the “MIP”) in connection with and at the time of the Company’s emergence from its 2015 chapter 11 bankruptcy and any Petrobras Litigation Award granted under the MIP (collectively, the “Initial Award”) which shall be governed in accordance with the applicable award agreement. For the avoidance of doubt, Stock Awards (other than the Initial Award) that are performance-based shall vest according to the Stock Award’s “target level,” provided that such performance-based Stock Awards may vest at a higher level upon a Change of Control, subject to the further determination of the Compensation Committee.

0.0.3.Expenses. All accrued compensation and unreimbursed expenses through the Termination Date. Such amounts shall be paid to Executive in a lump sum in cash within thirty (30) days after the Termination Date.

0.0.4.Mitigation. Executive shall be free to accept other employment during such period, and there shall be no offset of any employment compensation earned by Executive in such other employment during such period against payments due Executive under this Section 3, and there shall be no offset in any compensation received from such other employment against the Base Salary set forth above.

0.22Termination In Event of Death: Benefits. If Executive’s employment is terminated by reason of Executive’s death during the Employment Period, this Agreement shall terminate, except as provided herein, without further obligation to Executive’s legal representatives under this Agreement, other than for payment of all accrued compensation which shall be paid as otherwise provided in this Agreement, unreimbursed expenses which shall be reimbursed in accordance with the Company’s reimbursement policy, the timely payment or provision of Other Benefits through the date of death, one (1) year’s Base Salary, and such cash bonus or Stock Award, other than the Initial Award, as Executive would otherwise have been awarded in that calendar year if Executive’s death had not occurred. Such Base Salary shall be paid to Executive’s estate or beneficiary, as applicable, in a lump sum in cash within ninety (90) days after the date of death. Such cash bonus, if any, shall be paid to Executive’s estate or beneficiary, as applicable, at such time that such cash bonus would have been paid if Executive had remained employed. Such Stock Award, if any, shall be granted to Executive’s estate or beneficiary, as applicable, as of Executive’s date of death. With respect to the provision of Other Benefits, the term Other Benefits as used in this Section shall include, without limitation, and Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company to the estates and beneficiaries of other executive level employees of the Company under such plans, programs, practices, and policies relating to death benefits, if any, as in effect with respect to other executives and their beneficiaries at any time during the one hundred twenty (120) day period immediately preceding the date of death. Additionally, all Stock Awards, other than the Initial Award (which shall be governed by the applicable award agreement), shall be vested immediately and shall be exercisable for the lesser of one year after the date of such vesting or the remaining term of such option.

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0.23Termination In Event of Disability: Benefits. If Executive’s employment is terminated by reason of Executive’s Disability during the Employment Period, this Agreement shall terminate, except as provided herein, without further obligation to Executive under this Agreement, other than for payment of all accrued compensation which shall be paid as otherwise provided in this Agreement, unreimbursed expenses which shall be reimbursed in accordance with the Company’s reimbursement policy, the timely payment or provision of Other Benefits through the Termination Date, one (1) year’s Base Salary, and such cash bonus or Stock Award, other than the Initial Award, as Executive would otherwise have been awarded in that calendar year if Executive’s termination had not occurred. Such Base Salary shall be paid to Executive in a lump sum in cash within ninety (90) days after the Termination Date. Such cash bonus, if any, shall be paid to Executive at such time that such cash bonus would have been paid if Executive had remained employed. Such Stock Award, if any, shall be granted as of Executive’s Termination Date. In addition, all outstanding Stock Awards, other than the Initial Award (which shall be governed by the applicable award agreement), shall vest immediately upon such termination due to Disability and shall be exercisable from the Termination Date for the remainder of their term.

0.24Voluntary Termination by Executive and Termination for Cause: Benefits. Executive may terminate her employment with the Company without Good Reason by giving written notice of her intent and stating an effective Termination Date at least ninety (90) days after the date of such notice; provided, however, that the Company may accelerate such effective date by paying Executive through the proposed Termination Date and also vesting awards that would have vested but for this acceleration of the proposed Termination Date and also vesting awards that would have vested but for this acceleration of the proposed Termination Date. Upon such a termination by Executive, except as provided in Section 5, or upon termination for Cause by the Company, this Agreement shall terminate and the Company shall pay to Executive all accrued compensation, unreimbursed expenses and the Other Benefits through the Termination Date. Such amounts shall be paid to Executive in a lump sum in cash within thirty (30) days after the Termination Date. In addition, all unvested stock options shall terminate and all vested options will terminate one hundred twenty (120) days after the Termination Date or, if sooner, upon the expiration of the remaining term of such option.

0.25Change of Control: Benefits.

0.0.5.If (a) Executive’s employment is terminated either (i) by the Company without Cause, but not because of Executive’s Disability or death, or (ii) by Executive for Good Reason, (b) Executive’s Termination Date is during the period beginning six (6) months immediately preceding a Change of Control and ending twenty-four months after the date of the Change of Control, provided that if Executive’s Termination Date is prior to the date of a Change of Control such termination is an Anticipatory Termination and (c) Executive executes and delivers to the Company a Release Agreement in accordance with Section 3.9.4, Executive shall receive the following payments and benefits in lieu of any payments or benefits under Section 3.4.1 herein:

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0.0.0.1Base Salary and Annual Bonus. The Company shall pay Executive an amount equal to the sum of Executive’s Base Salary plus Executive’s Average Bonus Amount, multiplied by two (2). For purposes of this Section 3.8.1, “Average Annual Bonus” means the amount equal to the annual average of the annual bonuses earned in respect of a fiscal year of the Company that was paid or payable to Executive by the Company and any affiliate for each of the three fiscal years of the Company that immediately precede the fiscal year in which the Change of Control occurs, but not less than the greater of (A) Executive’s highest annual target bonus during any of such three preceding fiscal years or (B) Executive’s targeted bonus for the fiscal year in which the Change of Control occurs. Such amounts shall be paid on the sixtieth (60th) day following the Termination Date, provided, however, that if Executive’s termination of employment is an Anticipatory Termination, such amount shall be paid on the sixtieth (60th) day immediately following the Change of Control and shall be reduced by any payment previously made under Section 3.4.1.

0.0.0.2Accelerated Vesting of Stock Awards. Notwithstanding any provision of this Agreement to the contrary, in (A) the award agreement for the Stock Award or (B) the plan under which the Stock Award was granted, with respect to Executive, each outstanding Stock Award held by Executive immediately before the Termination Date and not yet exercised or forfeited (as the case may be) will automatically accelerate and become fully vested, exercisable, and nonforfeitable as of the Termination Date, or in the event of an Anticipatory Termination as of the date of the occurrence of the Change of Control (in each case, to the extent the Stock Award was not already fully vested and exercisable at such time), to the same extent as though all requisite time had passed to fully vest the Stock Award or cause it to become exercisable or nonforfeitable. This Section 3.8.1(ii) shall not apply to the Initial Award, which shall be governed by the terms of the applicable award agreement.

0.0.0.3Outplacement Assistance. The Company shall provide Executive with outplacement services, for a twelve (12) month period commencing on the Termination Date, or in the event of an Anticipatory Termination the date of the occurrence of the Change of Control, in an aggregate amount not to exceed $20,000. The Company shall establish reasonable procedures for the designation, review and approval of outplacement services, as well as for the payment or reimbursement of the charges for such services. All requests for payment or reimbursement of outplacement services must be submitted to the Company within eighteen (18) months following the Termination Date, or in the event of an Anticipatory Termination the date of the occurrence of the Change of Control, and, upon receipt and approval, will be paid or reimbursed by the Company within thirty (30) days thereafter, subject to Section 10 hereof.

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0.0.6.Notwithstanding anything to the contrary in the Change of Control Policy of Vantage Drilling Company, effective as of November 29, 2010 (the “Vantage Change of Control Policy”) or the Change of Control Policy of the Company (the “Company Change of Control Policy”), Executive shall not be entitled to receive any payments or benefits under the Vantage Change of Control Policy, the Company Change of Control Policy or any successor change of control policy or agreement of the Company or any of its affiliates.

0.0.7.Notwithstanding anything herein to the contrary, for purposes of this Agreement, the Change of Control Policy and any other plan, agreement or policy of the Company or any of its affiliates that is applicable to Executive, a Change of Control shall not include any change in corporate structure, any change in the identity of the Company’s ultimate shareholders, or any other effect resulting from a restructuring, bankruptcy case, or similar insolvency proceeding of the Company, Vantage Drilling Company or any of its or their current or former affiliates.

0.0.8.The payments and benefits provided in this Agreement are the sole payments and benefits to be provided to Executive in the event of Executive’s termination of employment, including under any change of control severance plan or policy sponsored or maintained by the Company or any affiliate or any predecessor or successor of the Company, including the Vantage Change of Control Policy and the Company Change of Control Policy.

0.26Termination Procedure.

0.0.9.Notice of Termination. Any termination of Executive’s employment by the Company or by Executive during the Employment Period (other than pursuant to Section 3.5) shall be communicated by written Notice of Termination to the other party. For purposes of this Agreement, a “Notice of Termination” shall mean a notice indicating the specific termination provision in this Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under that provision.

0.0.10.Termination Date. “Termination Date” shall mean (i) if Executive’s employment is terminated by her death, the date of her death, (ii) if Executive’s employment is terminated pursuant to Section 3.6, thirty (30) days after the date of receipt of the Notice of Termination (provided that Executive does not return to the substantial performance of her duties on a full-time basis during such thirty (30) day period), (iii) if Executive’s employment is terminated voluntarily without Good Reason, the date determined in accordance with Section 3.7, and (iv) if Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or any later date (within thirty (30) days after the giving of such notice) set forth in such Notice of Termination.

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0.0.11.Mitigation. Executive shall not be required to mitigate damages with respect to the termination of her employment under this Agreement by seeking other employment or otherwise, and there shall be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided in this Agreement. Additionally, amounts owed to Executive under this Agreement shall not be offset by any claims the Company may have against Executive, and the Company’s obligation to make the payments provided for in this Agreement, and otherwise to perform its obligations hereunder, shall not be affected by any other circumstances, including, without limitation, any counterclaim, recoupment, defense or other right which the Company may have against Executive or others.

0.0.12.Release Agreement. Notwithstanding any provision of this Agreement to the contrary, in order to receive the benefits upon termination payable under this Section 3 (the “Termination Benefits”), Executive must first execute a release agreement (the “Release Agreement”) on a form provided by the Company within five (5) days of the Termination Date whereby Executive agrees to release and waive, in return for such benefits, any claims that Executive may have against the Company including, without limitation, for unlawful discrimination (e.g., Title VII of the U.S. Civil Rights Act); provided, however, the Release Agreement shall not release any claim by or on behalf of Executive for any payment or benefit that is provided under this Agreement or any employee benefit plan prior to the receipt thereof. Executive must return the executed Release Agreement and any applicable revocation period must lapse within sixty (60) days of the Termination Date. The Company shall also execute the Release Agreement; provided, however, that the Company may, in its sole discretion, waive the requirement that the Release Agreement be executed by Executive and the Company as a condition to Executive’s receipt of the Termination Benefits. Notwithstanding any provision herein to the contrary, unless the Company has waived the requirement for Executive and the Company to execute the Release Agreement (as provided in the preceding sentence), no Termination Benefits shall be payable or provided by the Company unless and until the Release Agreement has been executed by Executive, has not been revoked, and is no longer subject to revocation by Executive. The Termination Benefits shall be paid or provided by the Company at the end of such 60-day period, but only if the Release Agreement has been properly executed by Executive and is not revocable, and has not been revoked, at that time, regardless of the date on which the Release Agreement was actually executed by Executive. If the conditions set forth in the preceding sentence are not satisfied by Executive, the Termination Benefits hereunder shall be forfeited.

0.27Certain Excise Tax Matters.

0.0.13.Notwithstanding any other provision of this Agreement to the contrary, if any payment or benefit by or from the Company or any of its affiliates or successors to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise would be subject to the Excise Tax (as hereinafter defined in Section 3.10.6) (all such payments and benefits being

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collectively referred to herein as the “Payments”), then except as otherwise provided in Section 3.10.2, the Payments shall be reduced (but not below zero) or eliminated (as further provided for in Section 3.10.3) to the extent the Independent Tax Advisor (as hereinafter defined in Section 3.10.5) shall reasonably determine is necessary so that no portion of the Payments shall be subject to the Excise Tax.

0.0.14.Notwithstanding the provisions of Section 3.10.1, if the Independent Tax Advisor reasonably determines that Executive would receive, in the aggregate, a greater amount of the Payments on an after-tax basis (after including and taking into account all applicable federal, state, and local income, employment and other applicable taxes and the Excise Tax) if the Payments were not reduced or eliminated pursuant to Section 3.10.1, then no such reduction or elimination shall be made notwithstanding that all or any portion of the Payments may be subject to the Excise Tax.

0.0.15.For purposes of determining which of Section 3.10.1 and Section 3.10.2 shall be given effect, the determination of which of the Payments shall be reduced or eliminated to avoid the Excise Tax shall be made by the Independent Tax Advisor, provided that the Independent Tax Advisor shall reduce or eliminate, as the case may be, the Payments in the following order (and within the category described in each of the following Sections 3.10.3.1 through 3.10.3.5, in reverse order beginning with the Payments which are to be paid farthest in time except as otherwise provided in Section 3.10.3.4):

A.by first reducing or eliminating the portion of the Payments otherwise due and which are not payable in cash (other than that portion of the Payments subject to Sections 3.10.3.4 and 3.10.3.5);

B.then by reducing or eliminating the portion of the Payments otherwise due and which are payable in cash (other than that portion of the Payments subject to Sections 3.10.3.3, 3.10.3.4 and 3.10.3.5);

C.then by reducing or eliminating the portion of the Payments otherwise due to or for the benefit of Executive pursuant to the terms of this Agreement and which are payable in cash;

D.then by reducing or eliminating the portion of the Payments otherwise due that represent equity-based compensation, such reduction or elimination to be made in reverse chronological order with the most recent equity-based compensation awards reduced first; and

E.then by reducing or eliminating the portion of the Payments otherwise due to or for the benefit of Executive pursuant to the terms of this Agreement and which are not payable in cash.

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0.0.16.The Independent Tax Advisor shall provide its determinations, together with detailed supporting calculations and documentation, to the Company and Executive for their review no later than ten (10) days after the Termination Date. The determinations of the Independent Tax Advisor under this Section 3.10 shall, after due consideration of the Company’s and Executive’s comments with respect to such determinations and the interpretation and application of this Section 3.10, be final and binding on all parties hereto absent manifest error. The Company and Executive shall furnish to the Independent Tax Advisor such information and documents as the Independent Tax Advisor may reasonably request in order to make the determinations required under this Section 3.10.

0.0.17.For purposes of this Section 3.10, “Independent Tax Advisor” shall mean a lawyer with a nationally recognized law firm, a certified public accountant with a nationally recognized accounting firm, or a compensation consultant with a nationally recognized actuarial and benefits consulting firm, in each case with expertise in the area of executive compensation tax law, who shall be selected by the Company and shall be acceptable to Executive (Executive’s acceptance not to be unreasonably withheld), and all of whose fees and disbursements shall be paid by the Company.

0.0.18.As used in this Agreement, the term “Excise Tax” means, collectively, the excise tax imposed by Section 4999 of the Code, together with any interest thereon, any penalties, additions to tax, or additional amounts with respect to such excise tax, and any interest in respect of such penalties, additions to tax or additional amounts.

4.DIRECTOR POSITIONS

Executive agrees that upon termination of employment, for any reason, at the request of the Chairman of the Board, she will immediately tender her resignation from any and all Board and other positions held with the Company and/or any of its subsidiaries and affiliates. If Executive remains as a director, at the election of the Board, after such termination, Executive shall be compensated as an outside director.

5.NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY

0.28Company’s Trade Secrets and Goodwill. The Company shall provide Executive with its trade secrets, goodwill, and confidential information of the Company and contact with the Company’s customers and potential customers. Executive also recognizes and agrees that the severance protections contained in this Agreement are provided in consideration for, among other things, the agreements contained in this Section, as well as the Stock Awards granted to Executive pursuant to this Agreement. Executive agrees that the business of the Company is highly competitive and that the trade secrets, goodwill, and confidential information of the Company is of primary importance to the success of the Company. In consideration of all of the foregoing, and in recognition of these conditions, and specifically for being provided trade secrets, goodwill, and confidential information, Executive agrees as follows:

0.29Non-Competition During Employment. Executive agrees during the Basic Term, and any extension of the Basic Term under this Agreement, she will not compete with the Company by engaging in the conception, design, development, production, marketing, or servicing of any product or service that is substantially similar to the products or services which the Company provides, and that she will not work for, in any capacity, assist, or became affiliated

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with as an owner, partner, etc., either directly or indirectly, any individual or business which offer or performs services, or offers or provides products substantially similar to the services and products provided by Company.

0.30Conflicts of Interest. Executive agrees that during the Basic Term, and any extension of the Basic Term under this Agreement, she will not engage, either directly or indirectly, in any activity (a “Conflict of Interest”) which might adversely affect the Company or its affiliates, including ownership of a material interest in any supplier, contractor, distributor, subcontractor, customer or other entity with which the Company does business or accepting any material payment, service, loan, gift, trip, entertainment, or other favor from a supplier, contractor, distributor, subcontractor, customer or other entity with which the Company does business, and that Executive will promptly inform the Chairman of the Company as to each offer received by Executive to engage in any such activity. Executive further agrees to disclose to the Company any other facts of which Executive becomes aware which might in Executive’s good faith judgment reasonably be expected to involve or give rise to a Conflict of Interest or potential Conflict of Interest.

0.31Non-Competition After Termination. In further consideration of the Company providing Executive with its confidential information, trade secrets, goodwill, and proprietary business information, Executive agrees that she shall not, at any time during the period of one (1) year after the termination of the later of the Basic Term and any extension of the Basic Term under this Agreement, for any reason, within any market or country in which the Company has operated assets or provided services, or formulated a plan to operate its assets or provide services during the last twelve (12) months of Executive’s employ, engage in or contribute Executive’s knowledge to any work which is competitive with or similar to a product, process, apparatus, services, or development on which Executive worked or with respect to which Executive had access to while employed by the Company.

0.0.19.In the event that Executive receives any payment of Base Salary from the Company subsequent to her Termination Date, the period of Executive’s non-competition shall continue for the duration of such payments to Executive, but in no event shall the period of non-competition exceed a period of two (2) years after Executive’s Termination Date, even should Executive continue to receive payments of Base Salary following such two (2) year period.

0.0.20.Notwithstanding the time period set forth in Sections 5.4 and 5.4.1 above, in the event of Executive's termination of employment from the Company for any reason within one (1) year after a Change of Control as defined in Section 3.1. C. above, the period of Executive's non-competition shall be for a period of six (6) months after such termination of employment date.

0.0.21.It is understood and agreed that the geographical area set forth in this covenant is divisible so that if this clause is invalid or unenforceable in an included geographic area, that area is severable and the clause remains in effect for the remaining included geographic areas in which the clause is valid.

0.32Non-Solicitation of Customers. In further consideration of the Company providing Executive with its confidential information, trade secrets, and proprietary business information, Executive further agrees that for a period of one (1) year after the termination of the Basic Term and any extension of the Basic Term under this Agreement, she will not solicit or accept any business similar in nature to the services provided by the Company from any customer or client or prospective customer or client with whom Executive dealt or solicited while employed by Company during the last twelve (12) months of her employment.

0.33Non-Solicitation of Employees. Executive agrees that for the duration of the Basic Term, and for a period of one (1) year after the termination of the Basic Term and any extension of the Basic Term under this Agreement, she will not either directly or indirectly, on her own behalf or on behalf of others, solicit, attempt to hire, or hire any person employed by Company to work for Executive or for another entity, firm, corporation, or individual.

0.34Confidential Information. Executive further agrees that she will not, except as the Company may otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon, publish or otherwise disclose to any

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third party any Confidential Information or proprietary information of the Company, or authorize anyone else to do these things at any time either during or subsequent to her employment with the Company. This Section shall continue in full force and effect after termination of Executive's employment and after the termination of this Agreement. Executive shall continue to be obligated under the Confidential Information Section of this Agreement not to use or to disclose Confidential Information of the Company so long as it shall not be publicly available. Executive's obligations under this Section with respect to any specific Confidential Information and proprietary information shall cease when that specific portion of the Confidential Information and proprietary information becomes publicly known, in its entirety and without combining portions of such information obtained separately. It is understood that such Confidential Information and proprietary information of the Company include matters that Executive conceives or develops, as well as matters Executive learns from other employees of Company. Confidential Information is defined to include information: (1) disclosed to or known by Executive as a consequence of or through her employment with the Company; (2) not generally known outside the Company; and (3) which relates to any aspect of the Company or its business, finances, operation plans, budgets, research, or strategic development. “Confidential Information” includes, but is not limited to the Company’s trade secrets, proprietary information, financial documents, long range plans, customer lists, employer compensation, marketing strategy, data bases, costing data, computer software developed by the Company, investments made by the Company, and any information provided to the Company by a third party under restrictions against disclosure or use by the Company or others.

0.35Original Material. Executive agrees that any inventions, discoveries, improvements, ideas, concepts or original works of authorship relating directly to the Company’s business, including without limitation information of a technical or business nature such as ideas, discoveries, designs, inventions, improvements, trade secrets, know-how, manufacturing processes, product formulae, design specifications, writings and other works of authorship, computer programs, financial figures, marketing plans, customer lists and data, business plans or methods and the like, which relate in any manner to the actual or anticipated business or the actual or anticipated areas of research and development of the Company and its divisions and affiliates, whether or not protectable by patent or copyright, that have been originated, developed or reduced to practice by Executive alone or jointly with others during Executive’s employment with the Company shall be the property of and belong exclusively to the Company. Executive shall promptly and fully disclose to the Company the origination or development by Executive of any such material and shall provide the Company with any information that it may reasonably request about such material. Either during the subsequent to Executive’s employment, upon the request and at the expense of the Company or its nominee, and for no remuneration in addition to that due Executive pursuant to Executive’s employment by the Company, but at no expense to Executive, Executive agrees to execute, acknowledge, and deliver to the Company or its attorneys any and all instruments which, in the judgment of the Company or its attorneys, may be necessary or desirable to secure or maintain for the benefit of the Company adequate patent, copyright, and other property rights in the United States and foreign countries with respect to any such inventions, improvements, ideas, concepts, or original works of authorship embraced within this Agreement.

0.36Return of Documents, Equipment, Etc. All writings, records, and other documents and things comprising, containing, describing, discussing, explaining, or evidencing any Confidential Information, and all equipment, components, parts, tools, and the like in Executive’s custody or possession that have been obtained or prepared in the course of Executive’s employment with the Company shall be the exclusive property of the Company, shall not be copied and/or removed from the premises of the Company, except in pursuit of the business of the Company, and shall be delivered to the Company, without Executive retaining any copies, upon notification of the termination of Executive’s employment or at any other time requested by the Company. The Company shall have the right to retain, access, and inspect all property of Executive of any kind in the office, work area, and on the premises of the Company upon termination of Executive’s employment and at any time during employment by the Company upon termination of Executive’s employment and at any time during employment by the Company to ensure compliance with the terms of this Agreement.

0.37Reaffirm Obligations. Upon termination of her employment with the Company, Executive, if requested by Company, shall reaffirm in writing Executive’s recognition of the importance of maintaining the

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confidentiality of the Company’s Confidential Information and proprietary information, and reaffirm any other obligations set forth in this Agreement.

0.38Prior Disclosure. Executive represents and warrants that she has not used or disclosed any Confidential Information she may have obtained from Company prior to signing this Agreement, in any way inconsistent with the provisions of this Agreement.

0.39Confidential Information of Prior Companies. Executive will not disclose or use during the period of her employment with the Company any proprietary or Confidential Information or Copyright Works which Executive may have acquired because of employment with an employer other than the Company or acquired from any other third party, whether such information is in Executive’s memory or embodied in a writing or other physical form.

0.40Rights Upon Breach. If Executive breaches, any of the provisions contained in Section 5 of this Agreement (the “Restrictive Covenants”), the Company shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity:

(a)Specific Performance. The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.

(b)Accounting. The right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive as the result of any action constituting a breach of the Restrictive Covenants.

0.41Remedies For Violation of Non-Competition or Confidentiality Provisions. Without limiting the right of the Company to pursue all other legal and equitable rights available to it for violation of any of the obligations and covenants made by Executive herein, it is agreed that:

(a)the skills, experience and contacts of Executive are of a special, unique, unusual and extraordinary character which give them a peculiar value;

(b)because of the business of the Company, the restrictions agreed to by Executive as to time and area contained in the Agreement are reasonable; and

(c)the injury suffered by the Company by a violation of any obligation or covenant in the Agreement resulting from loss of profits created by (i) the competitive use of such skills, experience contacts and otherwise and/or (ii) the use or communication of any information deemed confidential herein will be difficult to calculate in damages in an action at law and cannot fully compensate the Company for any violation of any obligation or covenant in the Agreement, accordingly:

(d)

(i)the Company shall be entitled to injunctive relief to prevent violations thereof and prevent Executive from rendering any services to any person, firm or entity in breach of such obligation or covenant and to prevent Executive from divulging any confidential information; and

(ii)compliance with the Agreement is a condition precedent to the Company’s obligation to make payments of any nature to Executive, subject to the other provisions hereof.

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(a)Executive waives any objection to the enforceability of the restrictive covenants and agrees to be estopped from denying the legality and enforceability of these provisions.

0.42Severability of Covenants. Executive acknowledges and agrees that the Restrictive Covenants are reasonable and valid in duration and geographical scope and in all other respects. If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect without regard to the invalid portions.

0.43Court Review. If any court determines that any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or geographical scope of, or scope of activities restrained by, such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable.

0.44Enforceability in Jurisdictions. The Company and Executive intend to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction within the geographical scope of such Restrictive Covenants. If the courts of any one or more of such jurisdictions hold the Restrictive Covenants unenforceable by reason of the breadth of such scope or otherwise, it is the intention of the Company that such determination not bar or in any way affect the right of the Company to the relief provided above in the courts of any other jurisdiction within the geographical scope of such Restrictive Covenants, as to breaches of such Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants.

0.45Extension of Post-Employment Restrictions. In the event Executive breaches Section 5 above, the restrictive time periods contained in those provisions will be extended by the period of time Executive was in violation of such provisions.

6.INDEMNIFICATION

0.46General. The Company agrees that if Executive is made a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that Executive is or was a trustee, director or officer of the Company, the Company, or any predecessor to the Company (including any sole proprietorship owned by Executive) or any of their affiliates or is or was serving at the request of the Company, the Company, any predecessor to the Company (including any sole proprietorship owned by Executive), or any of their affiliates as a trustee, director, officer, member, employee or agent of another corporation or a partnership, joint venture, limited liability company, trust or other enterprise, including, without limitation, service with respect to employee benefit plans, whether or not the basis of such Proceeding is alleged action in an official capacity as a trustee, director, officer, member, employee or agent while serving as a trustee, director, officer, member, employee or agent, Executive shall be indemnified and held harmless by the Company to the fullest extent authorized by Texas or Delaware law, as the same exists or may hereafter be amended, against all Expenses incurred or suffered by Executive in connection therewith, and such indemnification shall continue as to Executive even if Executive has ceased to be an officer, director, trustee or agent, or is no longer employed by the Company and shall inure to the benefit of her heirs, executors and administrators.

0.47Expenses. As used in this Section, the term “Expenses” shall include, without limitation, damages, losses, judgments, liabilities, fines, penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’ fees, and disbursements and costs of attachment or similar bonds, investigations, and any expenses of establishing a right to indemnification under this Agreement.

0.48Enforcement. If a claim or request under this Section 6 is not paid by the Company or on its behalf, within thirty (30) days after a written claim or request has been received by the Company, Executive may at any time thereafter bring an arbitration claim against the Company to recover the unpaid amount of the claim or request and if successful in whole or in part, Executive shall be entitled to be paid also the expenses of prosecuting such suit. All

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obligations for indemnification hereunder shall be subject to, and paid in accordance with, applicable Texas or Delaware law.

0.49Partial Indemnification. If Executive is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Executive for the portion of such Expenses to which Executive is entitled.

0.50Advances of Expenses. Expenses incurred by Executive in connection with any Proceeding shall be paid by the Company in advance upon request of Executive that the Company pay such Expenses, but only in the event that Executive shall have delivered in writing to the Company (i) an undertaking to reimburse the Company for Expenses with respect to which Executive is not entitled to indemnification and (ii) a statement of her good faith belief that the standard of conduct necessary for indemnification by the Company has been met.

0.51Notice of Claim. Executive shall give to the Company notice of any claim made against her for which indemnification will or could be sought under this Agreement. In addition, Executive shall give the Company such information and cooperation as it may reasonably require and as shall be within Executive’s power and at such times and places as are convenient for Executive.

0.52Defense of Claim. With respect to any Proceeding as to which Executive notifies the Company of the commencement thereof:

(a)The Company will be entitled to participate therein at its own expense;

(b)Except as otherwise provided below, to the extent that it may wish, the Company will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Executive, which in the Company’s sole discretion may be regular counsel to the Company and may be counsel to other officers and directors of the Company or any subsidiary. Executive also shall have the right to employ her own counsel in such action, suit or proceeding if she reasonably concludes that failure to do so would involve a conflict of interest between the Company and Executive, and under such circumstances the fees and expenses of such counsel shall be at the expense of the Company.

(c)The Company shall not be liable to indemnify Executive under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner which would impose any penalty that would not be paid directly or indirectly by the Company or limitation on Executive without Executive’s written consent. Neither the Company nor Executive will unreasonably withhold or delay their consent to any proposed settlement.

0.53Non-exclusivity. The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Section 6 shall not be exclusive of any other right which Executive may have or hereafter may acquire under any statute or certificate of incorporation or by-laws of the Company or any subsidiary, agreement, vote of shareholders or disinterested directors or trustees or otherwise.

7.LEGAL FEES AND EXPENSES

If any contest or dispute shall arise between the Company and Executive regarding any provision of this Agreement, the Company shall reimburse Executive for all legal fees and expenses reasonably incurred by Executive in connection with such contest or dispute, but only if Executive prevails to a substantial extent with respect to Executive’s claims brought and pursued in connection with such contest or dispute. Such reimbursement shall be made as soon as practicable following the resolution of such contest or dispute (whether or not appealed) to the extent the Company receives reasonable written evidence of such fees and expenses. The

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Company shall advance Executive reasonable attorney’s fees during any arbitration proceedings if brought by Executive, up to but not to exceed Three Hundred Thousand Dollars ($300,000).

8.BREACH

Executive agrees that any breach of restrictive covenants above cannot be remedied solely by money damages, and that in addition to any other remedies the Company may have, the Company is entitled to obtain injunctive relief against Executive. Nothing herein, however, shall be construed as limiting the Company’s right to pursue any other available remedy at law or in equity, including recovery of damages and termination of this Agreement and/or any payments that may be due pursuant to this Agreement.

9.RIGHT TO ENTER AGREEMENT

Executive represents and covenants to Company that she has full power and authority to enter into this Agreement and that the execution of this Agreement will not breach or constitute a default of any other agreement or contract to which she is a party or by which she is bound.

10.COMPLIANCE WITH SECTION 409A.

0.54Separation from Service. Notwithstanding anything to the contrary in this Agreement, with respect to any amounts payable to Executive under this Agreement in connection with a termination of Executive’s employment that would be considered “non-qualified deferred compensation” under Section 409A of the Code, in no event shall a termination of employment be considered to have occurred under this Agreement unless such termination constitutes Executive’s “separation from service” with the Company as such term is defined in Treasury Regulation Section 1.409A-1(h), and any successor provision thereto (“Separation from Service”).

0.55Section 409A Compliance; Payment Delays.

(i)Notwithstanding anything to the contrary in this Agreement, to the maximum extent permitted by applicable law, the severance payments payable to Executive pursuant to this Agreement shall be made in reliance upon Treasury Regulation Section 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Section 409A of the Code, and if Executive is deemed at the time of her Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited payment under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s termination benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s death. Upon the earlier of such dates, all payments deferred pursuant to this Section 10 (including interest on any such payments, at the prime interest rate, as published in The Wall Street Journal, over the period such payments are deferred) shall be paid in a lump sum to Executive (or Executive’s estate).

(ii)The determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of her Separation from Service shall be made by the Company in accordance with the terms of Section 409A of the Code, and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

0.56Section 409A; Separate Payments. This Agreement is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Agreement become subject

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to (a) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (b) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. Notwithstanding the preceding, in no event shall the Company be required to provide a tax gross up payment to or otherwise reimburse Executive with respect to Section 409A Penalties. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment.

0.57In-kind Benefits and Reimbursements. Notwithstanding anything to the contrary in this Agreement or in any Company policy with respect to such payments, in-kind benefits and reimbursements provided under this Agreement during any tax year of Executive shall not affect in-kind benefits or reimbursements to be provided in any other tax year of Executive and are not subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in this Agreement, reimbursement requests must be timely submitted by Executive and, if timely submitted, reimbursement payments shall be made to Executive as soon as administratively practicable following such submission in accordance with the Company’s policies regarding reimbursements, but (except as provided below in Section 10.5) in no event later than the last day of Executive’s taxable year following the taxable year in which the expense was incurred. This Section 10.4 shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to Executive.

0.58Reformation. If any provision of this Agreement would cause Executive to occur any additional tax under Code Section 409A, the parties will in good faith attempt to reform the provision in a manner that maintains, to the extent possible, the original intent of the applicable provision without violating the provision of Code Section 409A.

11.ENFORCEABILITY

The agreements contained in the restrictive covenant provisions of Section 5 this Agreement are independent of the other agreements contained herein. Accordingly, failure of the Company to comply with any of its obligations outside of such Sections do not excuse Executive from complying with the agreements contained herein.

12.SURVIVABILITY

The agreements contained in Section 5 shall survive the termination of this Agreement for any reason.

13.ASSIGNMENT

This Agreement cannot be assigned by Executive. The Company may assign this Agreement only to a successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and assets of the Company provided such successor expressly agrees in writing reasonably satisfactory to Executive to assume and perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession and assignment had taken place. Failure of the Company to obtain such written agreement prior to the effectiveness of any such succession shall be a material breach of this Agreement.

OFFSHORE GROUP INVESTMENT LIMITED EMPLOYMENT AGREEMENT
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14.BINDING AGREEMENT

Executive understands that her obligations under this Agreement are binding upon Executive’s heirs, successors, personal representatives, and legal representatives.

15.NOTICES

All notices pursuant to this Agreement shall be in writing and sent certified mail, return receipt requested, addressed as set forth below, or by delivering the same in person to such party, or by transmission by facsimile to the number set forth below. Notice deposited in the United States Mail, mailed in the manner described hereinabove, shall be effective upon deposit. Notice given in any other manner shall be effective only if and when received:

If to Executive:

Linda J. Ibrahim

12906 Waters Edge Place

Houston, TX 77041

If to Company:

Offshore Group Investment Limited

c/o Vantage Energy Services, Inc.

777 Post Oak Blvd., Suite 800

Houston, TX 77056

16.GENERAL RELEASE OF CLAIMS AGAINST VANTAGE DRILLING COMPANY

Executive, on behalf of himself and his heirs, executors, administrators, successors and assigns, irrevocably and unconditionally releases, waives and forever discharges Vantage Drilling Company and its present and former agents, employees, managers, officers, directors, attorneys, stockholders, plan fiduciaries, assigns, representatives, executives and all other persons or entities acting by, through or in concert with any of them (the “Released Parties”) from all claims, demands, actions, causes of action, charges, complaints, liabilities, obligations, promises, sums of money, agreements, representations, controversies, disputes, damages, suits, right, sanctions, costs (including attorneys’ fees), losses, debts and expenses of any nature whatsoever, whether known or unknown, fixed or contingent, which Executive has, had or may ever have against the Released Parties arising out of, concerning or related to his employment with Vantage Drilling Company and its affiliates, from the beginning of time and up to and including the date Executive executes this Agreement. This includes, without limitation, (i) law or equity claims; (ii) contract (express or implied) or tort claims; (iii) claims arising under any federal, state or local laws of any jurisdiction that prohibit age, sex, race, national origin, color, disability, religion, veteran, military status, sexual orientation or any other form of discrimination, harassment, hostile work environment or retaliation (including, without limitation, the Older Workers Benefit Protection Act, the Americans with Disabilities Act of 1990, the Americans with Disabilities Act

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Amendments of 2008, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and/or 1871, 42 U.S.C. Section 1981, the Rehabilitation Act, the Family and Medical Leave Act, the Sarbanes-Oxley Act, the Employee Polygraph Protection Act, the Worker Adjustment and Retraining Notification Act, the Equal Pay Act of 1963, the Lilly Ledbetter Fair Pay Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, Section 1558 of the Patient Protection and Affordable Care Act of 2010, the Consolidated Omnibus Budget Reconciliation Act of 1985, the “Texas Commission on Human Rights Act” or Chapter 21 of the Texas Labor Code, or any other federal, state or local laws of any jurisdiction); (iv) claims under any other federal, state, local, municipal or common law whistleblower protection, discrimination, wrongful discharge, anti-harassment or anti-retaliation statute or ordinance; (v) claims arising under ERISA; or (vi) any other statutory or common law claims related to Executive’s employment with Vantage Drilling Company and its affiliates. Executive further represents that, as of the date of his execution of this Agreement, he has not been the victim of any illegal or wrongful acts by any of the Released Parties, including, without limitation, discrimination, retaliation, harassment or any other wrongful act based on sex, age, or any other legally protected characteristic. Notwithstanding the foregoing, this Agreement specifically does not release any claim or cause of action by or on behalf of Executive (or his beneficiary) with respect to (a) Executive’s right to indemnification or to be held harmless pursuant to applicable corporate governance documents, director and officer indemnification agreements and/or applicable laws, (b) any outstanding restricted stock award, other outstanding equity award or equity interest in Vantage Drilling Company, or (c) any claim for accrued compensation or employee benefits from Vantage Drilling Company that have not been assumed by the Company.

17.WAIVER

No waiver by either party to this Agreement of any right to enforce any term or condition of this Agreement, or of any breach hereof, shall be deemed a waiver of such right in the future or of any other right or remedy available under this Agreement. Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including, without limitation, the right of Executive to terminate employment for Good Reason pursuant to Section 3.1.E. hereof (subject to the requirements of Section 3.1.E. hereof), shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

18.SEVERABILITY

If any provision of this Agreement is determined to be void invalid, unenforceable, or against public policy, such provisions shall be deemed severable from the Agreement, and the remaining provisions of the Agreement will remain unaffected and in full force and effect. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

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19.ARBITRATION

In the event any dispute arises out of Executive’s employment with or by the Company, or separation/termination therefrom, whether as an employee, which cannot be resolved by the Parties to this Agreement, such dispute shall be submitted to final and binding arbitration. The arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA”). If the Parties cannot agree on an arbitrator, a list of seven (7) arbitrators will be requested from AAA, and the arbitrator will be selected using alternate strikes with Executive striking firm. The cost of the arbitration will be shared equally by Executive and the Company; provided, however, the Company shall promptly reimburse Executive for all costs and expenses incurred in connection with any dispute in an amount up to, but not exceeding 20 percent of Executive’s Base Salary unless such termination was for Cause in which event Executive shall not be entitled to reimbursement unless and until it is determined she was terminated other than for Cause. Arbitration of such disputes is mandatory and in lieu of any and all civil causes of action and lawsuits either party may have against the other arising out of Executive’s employment with the Company, or separation therefrom. Such arbitration shall be held in Houston, Texas. This provision shall not, however, preclude the Company from obtaining injunctive relief in any court of competent jurisdiction to enforce Section 5 of this Agreement.

20.ENTIRE AGREEMENT

The terms and provisions contained herein shall constitute the entire agreement between the parties with respect to Executive’s employment with the Company during the Employment Period. This Agreement replaces and supersedes the Previous Agreement and any and all existing agreements entered into between Executive and the Company relating generally to the same subject matter, if any, and shall be binding upon Executive’s heirs, executors, administrators, or other legal representatives or assigns.

21.SECTION HEADINGS

The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation.

22.MODIFICATION OF AGREEMENT

This Agreement may not be changed or modified or released or discharged or abandoned or otherwise terminated, in whole or in part, except by an instrument in writing signed by Executive and an officer or other authorized executive of the Company.

23.UNDERSTANDING OF AGREEMENT

Executive represents and warrants that she has read and understood each and every provision of this Agreement, and Executive understands that she has the right to obtain advice from legal counsel of choice, if necessary and desired, in order to interpret any and all provisions of this Agreement, and that Executive has freely and voluntarily entered into this Agreement.

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24.GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Texas.

25.WITHHOLDING

All payments hereunder shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation.

26.JURISDICTION AND VENUE.

With respect to any litigation regarding this Agreement, Executive agrees to venue in the state or federal courts in Harris County, Texas and agrees to waive and does hereby waive any defenses and/or arguments based upon improper venue and/or lack of personal jurisdiction. By entering into this Agreement, Executive agrees to personal jurisdiction in the state and federal courts in Harris County, Texas.

27.NO PRESUMPTION AGAINST INTEREST.

This Agreement has been negotiated, drafted, edited and reviewed by the respective parties, and therefore, no provision arising directly or indirectly herefrom shall be construed against any party as being drafted by said party.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

OFFSHORE GROUP INVESTMENT LIMITED

By:

Title:

EXECUTIVE

Linda J. Ibrahim

OFFSHORE GROUP INVESTMENT LIMITED EMPLOYMENT AGREEMENT
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EX-31.1

Exhibit 31.1

CERTIFICATE PURSUANT TO

RULES 13a-14(a) and 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES–OXLEY ACT OF 2002

I, Ihab Toma, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Vantage Drilling International;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 12, 2021	/s/ IHAB TOMA
	Ihab Toma
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATE PURSUANT TO

RULES 13a-14(a) and 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES–OXLEY ACT OF 2002

I, Douglas E. Stewart, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Vantage Drilling International;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 12, 2021	/s/ DOUGLAS E. STEWART
	Douglas E. Stewart
	Chief Financial Officer, General Counsel and Corporate Secretary

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 USC. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES–OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Vantage Drilling International (the “Company”) for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ihab Toma, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes–Oxley Act of 2002, that to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 12, 2021	/s/ IHAB TOMA
	Ihab Toma
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 USC. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES–OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Vantage Drilling International (the “Company”) for the quarter ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas E. Stewart, Chief Financial Officer, General Counsel and Corporate Secretary of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes–Oxley Act of 2002, that to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 12, 2021	/s/ DOUGLAS E. STEWART
	Douglas E. Stewart
	Chief Financial Officer, General Counsel and Corporate Secretary

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 02, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Registrant Name	VANTAGE DRILLING INTERNATIONAL
Entity Central Index Key	0001465872
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		13,115,026
Entity File Number	333-159299
Entity Tax Identification Number	98-1372204
Entity Address, Address Line One	777 Post Oak Boulevard
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77056
City Area Code	281
Local Phone Number	404-4700
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	E9
Document Quarterly Report	true
Document Transition Report	false

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 111,424	$ 141,945
Restricted cash	7,800	7,996
Trade receivables, net of allowance for doubtful accounts of $5.0 million, respectively	31,605	24,717
Materials and supplies	50,946	49,861
Prepaid expenses and other current assets	20,212	29,151
Total current assets	221,987	253,670
Property and equipment
Property and equipment	797,078	794,944
Accumulated depreciation	(306,337)	(278,562)
Property and equipment, net	490,741	516,382
Operating lease ROU assets	3,144	3,997
Other assets	15,315	12,126
Total assets	731,187	786,175
Current liabilities
Accounts payable	28,264	25,466
Other current liabilities	32,572	24,734
Total current liabilities	60,836	50,200
Long–term debt, net of discount and financing costs of $5,191 and $6,421, respectively	346,038	345,219
Other long-term liabilities	13,971	15,011
Shareholders' equity
Ordinary shares, $0.001 par value, 50 million shares authorized; 13,115,026 shares issued and outstanding, respectively	13	13
Additional paid-in capital	633,758	634,181
Accumulated deficit	(324,604)	(259,655)
Controlling interest shareholders' equity	309,167	374,539
Noncontrolling interests	1,175	1,206
Total equity	310,342	375,745
Total liabilities and shareholders' equity	$ 731,187	$ 786,175

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Long-term debt, discount and financing costs	$ 3,962	$ 4,781
Allowance for doubtful accounts	$ 5,000	$ 5,000
Ordinary shares, par value	$ 0.001	$ 0.001
Ordinary shares, shares authorized	50,000,000	50,000,000
Ordinary shares, shares issued	13,115,026	13,115,026
Ordinary shares, shares outstanding	13,115,026	13,115,026

XML

Consolidated Statement of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue
Total revenue	$ 35,601	$ 36,775	$ 55,767	$ 88,231
Operating costs and expenses
Operating costs	36,056	38,104	61,413	86,659
General and administrative	4,967	4,716	10,462	11,886
Depreciation	14,161	18,401	28,286	36,417
Total operating costs and expenses	55,184	61,221	100,161	134,962
Loss from operations	(19,583)	(24,446)	(44,394)	(46,731)
Other (expense) income
Interest income	10	111	110	812
Interest expense and other financing charges	(8,511)	(8,601)	(17,021)	(17,021)
Other, net	(179)	12	(793)	2,367
Total other expense	(8,680)	(8,478)	(17,704)	(13,842)
Loss before income taxes	(28,263)	(32,924)	(62,098)	(60,573)
Income tax provision (benefit)	720	(1,024)	2,882	1,897
Net loss	(28,983)	(31,900)	(64,980)	(62,470)
Net (loss) income attributable to noncontrolling interests	(18)	12	(31)	14
Net loss income attributable to shareholders	$ (28,965)	$ (31,912)	$ (64,949)	$ (62,484)
Loss per share
Basic and Diluted	$ (2.21)	$ (2.43)	$ (4.95)	$ (4.76)
Contract Drilling Services
Revenue
Total revenue	$ 31,655	$ 33,151	$ 49,380	$ 77,470
Reimbursables and Other
Revenue
Total revenue	$ 3,946	$ 3,624	$ 6,387	$ 10,761

XML

Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Ordinary Shares	Additional Paid-in Capital	Accumulated Earnings (Deficit)	Non-Controlling Interests
Beginning Balance at Dec. 31, 2019	$ 653,091	$ 13	$ 634,770	$ 17,064	$ 1,244
Beginning Balance (in shares) at Dec. 31, 2019		13,115,000
Share-based compensation	698		698
Share-based compensation - dividend equivalents	(2,204)		(2,204)
Net (loss) income	(30,570)			(30,572)	2
Ending Balance at Mar. 31, 2020	621,015	$ 13	633,264	(13,508)	1,246
Ending Balance (in shares) at Mar. 31, 2020		13,115,000
Beginning Balance at Dec. 31, 2019	653,091	$ 13	634,770	17,064	1,244
Beginning Balance (in shares) at Dec. 31, 2019		13,115,000
Net (loss) income	(62,470)
Ending Balance at Jun. 30, 2020	589,445	$ 13	633,594	(45,420)	1,258
Ending Balance (in shares) at Jun. 30, 2020		13,115,000
Beginning Balance at Mar. 31, 2020	621,015	$ 13	633,264	(13,508)	1,246
Beginning Balance (in shares) at Mar. 31, 2020		13,115,000
Share-based compensation	330		330
Net (loss) income	(31,900)			(31,912)	12
Ending Balance at Jun. 30, 2020	589,445	$ 13	633,594	(45,420)	1,258
Ending Balance (in shares) at Jun. 30, 2020		13,115,000
Beginning Balance at Dec. 31, 2020	$ 375,745	$ 13	634,181	(259,655)	1,206
Beginning Balance (in shares) at Dec. 31, 2020	13,115,026	13,115,000
Share-based compensation	$ 306		306
Share-based compensation - dividend equivalents	(760)		(760)
Net (loss) income	(35,997)			(35,984)	(13)
Ending Balance at Mar. 31, 2021	339,294	$ 13	633,727	(295,639)	1,193
Ending Balance (in shares) at Mar. 31, 2021		13,115,000
Beginning Balance at Dec. 31, 2020	$ 375,745	$ 13	634,181	(259,655)	1,206
Beginning Balance (in shares) at Dec. 31, 2020	13,115,026	13,115,000
Net (loss) income	$ (64,980)
Ending Balance at Jun. 30, 2021	$ 310,342	$ 13	633,758	(324,604)	1,175
Ending Balance (in shares) at Jun. 30, 2021	13,115,026	13,115,000
Beginning Balance at Mar. 31, 2021	$ 339,294	$ 13	633,727	(295,639)	1,193
Beginning Balance (in shares) at Mar. 31, 2021		13,115,000
Share-based compensation	31		31
Net (loss) income	(28,983)			(28,965)	(18)
Ending Balance at Jun. 30, 2021	$ 310,342	$ 13	$ 633,758	$ (324,604)	$ 1,175
Ending Balance (in shares) at Jun. 30, 2021	13,115,026	13,115,000

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (28,983)	$ (35,997)	$ (31,900)	$ (30,570)	$ (64,980)	$ (62,470)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense	14,161		18,401		28,286	36,417
Amortization of debt financing costs					819	820
Share-based compensation expense					337	1,028
Deferred income tax (benefit) expense					236	(90)
Gain on disposal of assets					(2,715)	0
Gain on settlement of restructuring agreement					0	(2,278)
Changes in operating assets and liabilities:
Trade receivables, net					(6,888)	(7,202)
Materials and Supplies					(1,481)	(1,297)
Prepaid expenses and other current assets					(1,440)	2,545
Other assets					(1,821)	3,410
Accounts payable					2,798	(14,680)
Other current liabilities and other long-term liabilities					5,905	(8,717)
Net cash used in operating activities					(40,944)	(52,514)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment					(2,711)	(2,021)
Net proceeds from sale of Titanium Explorer					13,557	0
Net cash provided by (used in) investing activities					10,846	(2,021)
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					(30,098)	(54,535)
Unrestricted and restricted cash and cash equivalents—beginning of period		$ 154,487		$ 242,944	154,487	242,944	$ 242,944
Unrestricted and restricted cash and cash equivalents—end of period	$ 124,389		$ 188,409		124,389	188,409	$ 154,487
Cash paid for:
Interest					16,197	16,197
Income taxes (net of refunds)					2,431	4,617
Non-cash investing and financing transactions:
Reallocation of Soehanah jack up rig acquisition value from equipment to materials and supplies					$ 0	$ 1,019

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Organization and Recent Events

6 Months Ended

Jun. 30, 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 operations 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, Including on the Oil and Gas Industry

The COVID-19 pandemic continues to spread worldwide and has exacerbated since the World Health Organization (the "WHO") first classified the COVID-19 outbreak as a pandemic in March 2020. The global spread of COVID-19, including its highly contagious variants and sub-lineages, have caused and continue 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, being forced to implement multiple and recurrent shelter-in-place and stay-at-home orders. These governmental responses 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.

We experienced significant challenges in 2020 when the COVID-19 pandemic began such as: (i) lower revenue due to terminations of (or amendments to) our existing drilling contracts; and (ii) increased expenses due to higher labor and related costs.  The Company actively managed and continues to manage the business in an attempt to mitigate any further impact from the continued presence of the COVID-19 pandemic; however, management anticipates that our industry, and the world at large, will need continue to operate in and further adapt to the current environment for the foreseeable future.

There has been a relatively strong recovery in global oil prices for the first half of 2021 (as compared to 2020) and our management remains cautiously optimistic with respect to the potential for the recovery to continue. However, oil and gas prices are expected to continue to be volatile as a result of (i) the ongoing COVID-19 pandemic, including the transmission and presence of highly contagious variants, (ii) changes in oil and gas inventories, (iii) industry demand, and (iv) potential future disagreements among OPEC+ countries regarding the supply of oil, and therefore, the Company cannot predict how long oil and gas prices will 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 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.

Agreements with Aquadrill

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 Aquadrill LLC, formerly known as Seadrill Partners LLC ("Aquadrill"), pursuant to which certain subsidiaries of VHI (the “VHI Entities”) will provide operating, management and marketing services to Aquadrill and its subsidiaries (the “Aquadrill Entities”) in respect of four deepwater floaters owned by the Aquadrill 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 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.

In connection with the entry into the Operations, 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 cash management services to the Aquadrill Entities in respect of the management of the vessels subject to, and covered by, 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.

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 “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 Sheet. The transactions contemplated by the Purchase and Sale Agreement closed on March 10, 2021. Pursuant to the Purchase and Sale Agreement, the Buyer is required to recycle the rig in an environmentally sound manner.

Letter of Award 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 from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer is currently performing under an existing three-year contract with ONGC, which is expected to close in the third quarter of 2021, and it will experience some brief out-of-service time for planned maintenance after the existing contract expires. The new contract with ONGC is expected to commence shortly thereafter.

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

2. Basis of Presentation and Significant Accounting Policies

Basis of Consolidation: The accompanying interim consolidated financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 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 VIEs (as discussed 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 U.S. 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, 2020 is derived from our December 31, 2020 audited consolidated 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, 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 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.

ADVantage is a joint venture company formed to operate deepwater drilling rigs in Egypt. We determined that ADVantage met the criteria of 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 leading offshore and onshore provider of oil and 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 benefits that could be potentially significant to the VIE. As a result, we consolidate ADVantage in our consolidated financial statements, we eliminate intercompany transactions and we present the interests that are not owned by us as “Noncontrolling interests” in our Consolidated Balance Sheets. The carrying amount associated with ADVantage was as follows:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	4,152	$	7,072
Non-current assets		87		84
Current liabilities		918		3,979
Non-current liabilities		949		741
Net carrying amount	$	2,372	$	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 evaluate our estimates, including those related to property and equipment, income taxes, insurance, employee benefits and contingent liabilities. Actual results could differ from these estimates.

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.

Materials and Supplies: Consists of materials, spare parts, consumables and related supplies for our drilling rigs. We record these materials and supplies at their average cost.

Property and Equipment: Consists 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 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 balance sheet and the resulting gain or loss is included in “Operating costs” or “General and administrative” expenses on the Consolidated Statement of Operations, depending on the nature of the asset. In the six months ended June 30, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three months ended June 30, 2021 and the three and six months ended June 30, 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 be computed as 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 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 drilling rigs, depends on the level of our customers’ expenditures for oil and gas exploration, development and production expenditures. Oil and 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 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 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. The projections and assumptions used during the fourth quarter of 2020 have not changed significantly as of June 30, 2021; accordingly, no triggering event has occurred to indicate that the 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 capitalize any interest for the reported periods.

Debt Financing Costs: Costs incurred with financing debt 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 Sheets as a direct deduction from the carrying amount of that debt liability.

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 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 the COVID-19 Pandemic, Including on the Oil and Gas Industry” 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 each of June 30, 2021 and December 31, 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.

Earnings (loss) per Share: We compute basic and diluted EPS in accordance with the two-class method. We include restricted stock units granted to employees and directors 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 ordinary share equivalents outstanding in the applicable period, as if all potentially dilutive securities were converted into Ordinary Shares (using the treasury stock method).

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Weighted average Ordinary Shares outstanding for basic EPS		13,115		13,115		13,115		13,115
Restricted share equity awards		—		—		—		—
Adjusted weighted average Ordinary Shares outstanding for diluted EPS		13,115		13,115		13,115		13,115

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Restricted share equity awards		218		200		218		200
Future potentially dilutive Ordinary Shares excluded from diluted EPS		218		200		218		200

Functional Currency: We consider USD to be the functional currency for all of our operations since the majority of our revenues and 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 three and six months ended June 30, 2021, we recognized a net loss of approximately $0.2 million and $0.8 million, respectively, related to currency exchange rates. The foreign exchange gain/loss for the three months ended June 30, 2020 related to currency exchange rates was immaterial. For the six months ended June 30, 2020, we recognized a net gain of approximately $0.1 million related to 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 balance sheet principally due to the short-term nature or floating rate nature of these instruments. As of June 30, 2021, the fair value of the 9.25% First Lien Notes was approximately $302.3 million 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.

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 December 2019, the FASB issued ASU No. 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. 

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2021

Revenue From Contract With Customer [Abstract]

Revenue from Contracts with Customers

3. Revenue from Contracts with Customers

The activities that primarily drive the revenue earned in our drilling contracts with 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 satisfied over time and comprised of a series of distinct time increments, or service periods. We have elected to exclude from the transaction price measurement all taxes assessed by a governmental authority.

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. In such cases, this may result in cumulative-effect adjustments to demobilization revenues upon changes in our estimates of future events during the contract term. 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.

Disaggregation of Revenue

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

	Three Months Ended June 30, 2021								Three Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	17,473	$	8,968	$	497	$	26,938	$	14,722	$	15,047	$	252	$	30,021
Amortized revenue		5,214		—		—		5,214		771		2,611		—		3,382
Reimbursable revenue		2,400		311		738		3,449		949		2,341		82		3,372
Total revenue	$	25,087	$	9,279	$	1,235	$	35,601	$	16,442	$	19,999	$	334	$	36,775
	Six Months Ended June 30, 2021								Six Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	26,371	$	17,795	$	595	$	44,761	$	38,708	$	34,778	$	798	$	74,284
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		5,214		—		—		5,214		867		3,117		—		3,984
Reimbursable revenue		4,722		332		738		5,792		4,174		4,896		417		9,487
Total revenue	$	36,307	$	18,127	$	1,333	$	55,767	$	44,225	$	42,791	$	1,215	$	88,231

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	3,169	$	2,905
Noncurrent contract cost assets		304		—
Current contract revenue assets		1,234		—
Current contract revenue liabilities		14,406		5,100

Significant changes in contract cost assets and contract revenue liabilities during the six months ended June 30, 2021 are as follows:

	Contract Cost Assets			Contract Revenue Assets		Contract Revenues
(unaudited, in thousands)
Balance as of December 31, 2020	$	2,905		$	—	$	5,100
Increase (decrease) due to contractual changes		3,758			1,234		13,326
Decrease due to recognition of revenue		(3,190	)		—		(4,020	)
Balance as of June 30, 2021 (1)	$	3,473		$	1,234	$	14,406

(1)We expect to recognize contract revenues of approximately $10.6 million during the remaining six months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of June 30, 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 resolved at the time of the future services.

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Leases

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases

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 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 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 calculation of lease liability and ROU assets.

The components of lease expense were as follows:

		Three Months Ended June 30,						Six Months Ended June 30,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020			2021			2020
Operating lease cost(1)	Operating costs	$	713		$	831		$	1,615		$	1,797
Operating lease cost(1)	General and administrative		151			151			303			303
Sublease income	Operating costs		(121	)		(121	)		(242	)		(242	)
Sublease income	General and administrative		(62	)		(62	)		(124	)		(124	)
Total operating lease cost		$	681		$	799		$	1,552		$	1,734

(1)  Short-term lease costs were approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2021, respectively, and $0.1 million and $0.3 million during the three and six months ended June 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

(unaudited, in thousands)	Classification in the Consolidated Balance Sheet	June 30, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	3,144	$	3,997
Total leased assets		$	3,144	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,927	$	2,038
Noncurrent operating	Other long-term liabilities		1,596		2,371
Total lease liabilities		$	3,523	$	4,409

As of June 30, 2021, maturities of lease liabilities were as follows:

(unaudited, in thousands)	Operating Leases
Remaining six months of 2021	$	1,172
2022		1,713
2023		949
2024		—
2025		—
Total future lease payments	$	3,834
Less imputed interest		(311	)
Present value of lease obligations	$	3,523

As of June 30, 2021, the weighted average discount rate and the weighted average remaining lease term for operating leases was 9.25% and 1.92 years, respectively. ROU assets and lease liabilities recorded for leases commencing during the three months ended June 30, 2021 was $0.3 million.

The bareboat charter contract on the Soehanah jackup rig was accounted for as an operating lease with charter revenue included in “Reimbursables and other” in the Consolidated Statement of Operations for the six months ended June 30, 2020. In May 2019, the parties to the bareboat charter terminated the charterer’s right to acquire the rig at the end of the term of the bareboat charter, which was originally intended to end on December 31, 2019. However, under the terms of the bareboat charter, the lease term continued until the rig was redelivered to the Company, which occurred on February 3, 2020.

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Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt

5. Debt

Our debt was composed of the following as of the dates indicated:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
9.25% First Lien Notes, net of financing costs of $3,962 and $4,781, respectively	$	346,038	$	345,219
Less current maturities of long-term debt		—		—
Long-term debt, net	$	346,038	$	345,219

9.25% First Lien Notes. On November 30, 2018, the Company issued $350.0 million in aggregate principal amount of 9.25% First Lien Notes in a private placement. The 9.25% First Lien Notes were issued at par and are fully guaranteed 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 assets of the Company and its subsidiaries, in each case subject to certain exceptions. The 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 November 15, 2023 and bear interest from the date of their issuance at the rate of 9.25% per year. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months and is payable semi-annually in arrears, commencing on May 15, 2019.

The First Lien Indenture 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.

The net proceeds from the issuance were used (i) to repay all obligations under the formerly existing 2016 Term Loan Facility and to terminate the credit agreement governing such facility, (ii) to redeem all the then-outstanding 10% Second Lien Notes, (iii) to fund the remaining amounts to be paid in connection with the purchase of the Soehanah jackup rig, (iv) to pay fees and expenses related to the foregoing and 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 formerly existing under the 2016 Term Loan Facility. The facility has a capacity of $50.0 million, with all outstanding letters of credit being cash collateralized. We have issued $11.0 million in letters of credit under this facility as of June 30, 2021.  

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Shareholders' Equity

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

Shareholders' Equity

6. Shareholders’ Equity

Stock Issuance

VDI has 50,000,000 authorized Ordinary Shares. Upon emergence from bankruptcy on the Effective Date, VDI issued 5,000,053 Ordinary Shares in connection with the settlement of Liabilities Subject to Compromise in accordance with the Reorganization Plan and the VDC Note. On December 4, 2019, VDI issued an additional 8,114,977 Ordinary Shares to convert all of the outstanding Convertible Notes. As of June 30, 2021, 13,115,026 Ordinary Shares were issued and outstanding.

Share-based Compensation  

 On August 9, 2016, the Company adopted the 2016 Amended 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.

No awards were granted to employees or directors during the six months ended June 30, 2021 and 2020. During the six months ended June 30, 2021, 18,224 of previously granted TBGs vested.

Both the TBGs and PBGs are classified as equity awards. For the six months ended June 30, 2021 and 2020, we recognized share-based compensation expense related to the TBGs of approximately $0.3 million and $1.0 million, respectively. As of June 30, 2021, we concluded that it was not probable that the TEV performance condition would be met and therefore, no 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 Sheets at June 30, 2021 to be paid upon settlement of the TBGs.

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

VDI is a Cayman Islands company operating in multiple countries through its subsidiaries. The Cayman Islands do not impose corporate income taxes. Consequently, we have calculated income taxes based on the laws and tax rates in effect in the countries in which operations are conducted, or in which we and our subsidiaries are considered resident for income tax purposes. Our income taxes are generally dependent upon the results of our operations and when we generate significant revenues in jurisdictions where the income tax liability is based on gross revenues or asset values, there is no correlation to the net operating results and the income tax expense. Furthermore, in some jurisdictions we do not pay taxes, pay taxes at lower rates or receive benefits for certain income and expense items, including interest expense, loss on extinguishment of debt, gains or losses on disposal or transfer of assets, reorganization expenses and write-off of development costs.

On January 22, 2020, VDI filed the Tax Election with the IRS 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. As a result, U.S. Holders are required to take into account their allocable share of items of income, gain, loss deduction and credit of VDI for each taxable year of VDI ending with or within the U.S. Holder’s taxable year, regardless of whether any distribution has been or will be received from VDI. Each item generally will have the same character and source (either U.S. or foreign) as though the U.S. Holder had realized the item directly. VDI’s change in tax status has not had a material impact on our consolidated financial statements as of June 30, 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted, a sweeping stimulus bill intended to bolster the U.S. economy and provide emergency financial assistance to qualifying businesses and individuals. The CARES Act, among other things, modified the net operating losses carryovers and carrybacks rules, and included modifications to Section 163(j) of the Code to increase the allowable business interest deduction.  On December 27, 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was enacted as part of the Consolidated Appropriations Act, 2021, followed by the American Rescue Plan Act on March 1, 2021. These recent laws, among other provisions, expand and extend the refundable employee retention tax credits previously made available under the CARES Act. As of June 30, 2021, our analysis of the provisions of the CARES Act revealed no material implications on the income tax provision.

Deferred income tax assets and liabilities are recorded for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. We provide for deferred taxes on temporary differences between the financial statements and tax bases of assets and liabilities using the enacted tax rates which are expected to apply to taxable income when the temporary differences are expected to reverse. Deferred tax assets are also provided for certain tax losses and tax credit carryforwards. A valuation allowance is established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. We do not establish deferred tax liabilities for certain of our foreign earnings that we intend to indefinitely reinvest to finance foreign activities.

In certain jurisdictions we are taxed under preferential tax regimes, which may require our compliance with specified requirements to sustain the tax benefits. We believe we are in compliance with the specified requirements and will continue to make all reasonable efforts to comply; however, our ability to meet the requirements of the preferential tax regimes may be affected by changes in laws or administrative practices, our business operations and other factors affecting the Company and industry, many of which are beyond our control.

Our periodic tax returns are subject to examination by taxing authorities in the jurisdictions in which we operate in accordance with the normal statute of limitations in the applicable jurisdiction. These examinations may result in assessments of additional taxes that are resolved with the authorities or through the courts. Resolution of these matters involves uncertainties and there are no assurances as to the outcome. Our tax years from 2011 onward remain open to examination in many of our jurisdictions and we are currently involved in several tax examinations in jurisdictions where we are operating or have previously operated. As information becomes available during the course of these examinations, we may increase or decrease our estimates of tax assessments and accruals.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

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.

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 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, and Mr. Hsin-Chi Su, a former member of VDC’s board of 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 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 subsequently filed a motion to clarify with the Brazilian Federal Court requesting the reconsideration of 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 interlocutory appeal to the 4th Circuit of the 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, 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. On May 13, 2021, the Brazilian Appellate Court’s reporting judge for our matter granted our request for preliminary relief and ordered an immediate stay of the Improbity Action as it applies to the Company until the judgment (on the merits) of the interlocutory appeal is rendered by the full three judge panel of the Brazilian Appellate Court. We will be obligated to file a statement of defense in the matter if the decision to stay the Improbity Action is later reversed. 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 $21.4 million, changes in the U.S. dollar amounts result from foreign exchange rate fluctuations), 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 other three defendants in the legal proceeding, as a precautionary measure, in the amount of approximately $85.6 million. The Company and the other three defendants 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 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 the Brazilian Federal Prosecutor had previously requested mutual legal assistance from the U.S. DOJ pursuant to 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 $85.6 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 interlocutory appeal with the Brazilian Appellate Court to stay the seizure and freezing order of the Brazilian Federal Court.

On May 20, 2019, the Company announced that the Brazilian Appellate Court's reporting judge 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 communicated the Brazilian Appellate Court’s ruling to the DOJ, has asked the Brazilian Federal Court to do the same. On July 18, 2019, the Company announced that the Brazilian Government made a filing with the Brazilian Federal Court reporting that the DOJ has 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 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 concluded.

The Company intends to continue to vigorously defend against the allegations made in the Improbity Action. However, we can neither predict the ultimate outcome of this matter nor that there will not be further developments in the “Car Wash” investigation or in any other ongoing investigation or related proceeding that could adversely affect us. At this time, we are not yet able to determine the likelihood of loss, if any, arising from this matter.

Restructuring Agreement and the 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 VDC, we and the Joint Official Liquidators, appointed to oversee the liquidation of VDC, 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. On March 4, 2020, we, and our subsidiaries on the one hand, and VDC and their subsidiaries, on the other, entered into a settlement agreement pursuant to 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 the Court of Grand Cayman. On March 16, 2020, the 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 six months ended June 30, 2020.

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Supplemental Financial Information

6 Months Ended

Jun. 30, 2021

Balance Sheet Related Disclosures [Abstract]

Supplemental Financial Information

9. Supplemental Financial Information

Prepaid Expenses and Other Current Assets

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable	$	5,721	$	6,797
Assets held for sale (1)		—		10,113
Other receivables		677		1,517
Income tax receivable		1,553		826
Prepaid insurance		1,302		386
Current deferred contract costs		3,169		2,905
Current contract asset		1,234		—
Other		6,556		6,607
	$	20,212	$	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 as of the dates indicated:  

	June 30, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	776,507		$	774,813
Assets under construction		1,463			561
Office and technology equipment		18,405			18,405
Leasehold improvements		703			1,165
		797,078			794,944
Accumulated depreciation		(306,337	)		(278,562	)
Property and equipment, net	$	490,741		$	516,382

Other Assets

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	5,165	$	4,546
Deferred certification costs		5,382		4,535
Deferred income taxes		1,818		1,923
Other noncurrent assets		2,950		1,122
	$	15,315	$	12,126

Other Current Liabilities

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	4,136	$	4,139
Compensation (1)		3,754		7,128
Income taxes payable		5,272		2,951
Current deferred revenue		14,406		5,100
Current portion of operating lease liabilities		1,927		2,038
Other		3,077		3,378
	$	32,572	$	24,734

(1)  Includes $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

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	1,101	$	970
2016 MIP - Dividend Equivalents (1)		8,765		8,006
Noncurrent operating lease liabilities		1,596		2,371
Other non-current liabilities		2,509		3,664
	$	13,971	$	15,011

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

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statement of Cash Flows as of the dates indicated:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Cash and cash equivalents	$	111,424	$	141,945
Restricted cash		7,800		7,996
Restricted cash included within Other Assets		5,165		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	124,389	$	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 June 30, 2021, the total outstanding amount due to ADES for such excess cash contributions was approximately $715,000, 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 June 30, 2021, accounts payable to ADES totaled approximately $0.4 million, included in “Accounts payable,” on the Consolidated Balance Sheet. There were no outstanding accounts receivable from ADES as of June 30, 2021.

We did not have any related party transactions that were not conducted in the ordinary course of business as of June 30, 2021.

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Business Segment and Significant Customer Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Business Segment and Significant Customer Information

10. Business Segment and Significant Customer Information

We aggregate our contract drilling operations into one reportable 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, preservation management services when stacked and operations and marketing services for operating and stacked rigs. Our management business (excluding reimbursable revenue) represented 1% of our total revenue for the three and six months ended June 30, 2021, respectively, and less than 1% of the total revenue for the three and six months ended June 30, 2020, respectively.

For the three and six months ended June 30, 2021 and 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. Three customers accounted for approximately 46%, 26% and 17% of consolidated revenue for the three months ended June 30, 2021 and four customers accounted for approximately 33%, 29%, 16% and 11% of consolidated revenue for the six months ended June 30, 2021. Four customers accounted for approximately 29%, 25%, 16% and 13% of consolidated revenue for the three months ended June 30, 2020, and five customers accounted for approximately 21%, 19%, 14%, 10% and 10% of the consolidated revenue for the six months ended June 30, 2020.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
(unaudited, in thousands)
India	$	9,297	$	9,203	$	18,152	$	18,884
Montenegro		16,253		—		16,306		—
Qatar		7,697		—		14,894		8,975
Indonesia		—		5,834		—		—
Congo		—		4,852		—		12,433
Gabon		—		—		—		9,133
Lebanon		—		10,816		—		17,121
Other countries (1)		2,354		6,070		6,415		21,685
Total revenues	$	35,601	$	36,775	$	55,767	$	88,231

(1)  “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 as of the dates indicated (as of dates representing property and equipment of less than 10% are included in “Other countries”): 

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Mediterranean	$	182,083	$	225,484
India		104,160		111,485
Indonesia		66,454		69,434
Other countries (1)		138,044		109,979
Total property and equipment	$	490,741	$	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 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.

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation: The accompanying interim consolidated financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 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 VIEs (as discussed 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 U.S. 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, 2020 is derived from our December 31, 2020 audited consolidated 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, 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 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.

ADVantage is a joint venture company formed to operate deepwater drilling rigs in Egypt. We determined that ADVantage met the criteria of 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 leading offshore and onshore provider of oil and 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 benefits that could be potentially significant to the VIE. As a result, we consolidate ADVantage in our consolidated financial statements, we eliminate intercompany transactions and we present the interests that are not owned by us as “Noncontrolling interests” in our Consolidated Balance Sheets. The carrying amount associated with ADVantage was as follows:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	4,152	$	7,072
Non-current assets		87		84
Current liabilities		918		3,979
Non-current liabilities		949		741
Net carrying amount	$	2,372	$	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

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 evaluate our estimates, including those related to property and equipment, income taxes, insurance, employee benefits and contingent liabilities. Actual results could differ from these estimates.

Cash and Cash Equivalents

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.

Materials and Supplies

Materials and Supplies: Consists of materials, spare parts, consumables and related supplies for our drilling rigs. We record these materials and supplies at their average cost.

Property and Equipment

Property and Equipment: Consists 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 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 balance sheet and the resulting gain or loss is included in “Operating costs” or “General and administrative” expenses on the Consolidated Statement of Operations, depending on the nature of the asset. In the six months ended June 30, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three months ended June 30, 2021 and the three and six months ended June 30, 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 be computed as 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 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 drilling rigs, depends on the level of our customers’ expenditures for oil and gas exploration, development and production expenditures. Oil and 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 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 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. The projections and assumptions used during the fourth quarter of 2020 have not changed significantly as of June 30, 2021; accordingly, no triggering event has occurred to indicate that the 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 capitalize any interest for the reported periods.

Debt Financing Costs

Debt Financing Costs: Costs incurred with financing debt 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 Sheets as a direct deduction from the carrying amount of that debt liability.

Rig and Equipment Certifications

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

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

The activities that primarily drive the revenue earned in our drilling contracts with 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 satisfied over time and comprised of a series of distinct time increments, or service periods. We have elected to exclude from the transaction price measurement all taxes assessed by a governmental authority.

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. In such cases, this may result in cumulative-effect adjustments to demobilization revenues upon changes in our estimates of future events during the contract term. 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.

Disaggregation of Revenue

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

	Three Months Ended June 30, 2021								Three Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	17,473	$	8,968	$	497	$	26,938	$	14,722	$	15,047	$	252	$	30,021
Amortized revenue		5,214		—		—		5,214		771		2,611		—		3,382
Reimbursable revenue		2,400		311		738		3,449		949		2,341		82		3,372
Total revenue	$	25,087	$	9,279	$	1,235	$	35,601	$	16,442	$	19,999	$	334	$	36,775
	Six Months Ended June 30, 2021								Six Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	26,371	$	17,795	$	595	$	44,761	$	38,708	$	34,778	$	798	$	74,284
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		5,214		—		—		5,214		867		3,117		—		3,984
Reimbursable revenue		4,722		332		738		5,792		4,174		4,896		417		9,487
Total revenue	$	36,307	$	18,127	$	1,333	$	55,767	$	44,225	$	42,791	$	1,215	$	88,231

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	3,169	$	2,905
Noncurrent contract cost assets		304		—
Current contract revenue assets		1,234		—
Current contract revenue liabilities		14,406		5,100

Significant changes in contract cost assets and contract revenue liabilities during the six months ended June 30, 2021 are as follows:

	Contract Cost Assets			Contract Revenue Assets		Contract Revenues
(unaudited, in thousands)
Balance as of December 31, 2020	$	2,905		$	—	$	5,100
Increase (decrease) due to contractual changes		3,758			1,234		13,326
Decrease due to recognition of revenue		(3,190	)		—		(4,020	)
Balance as of June 30, 2021 (1)	$	3,473		$	1,234	$	14,406

(1)We expect to recognize contract revenues of approximately $10.6 million during the remaining six months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of June 30, 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 resolved at the time of the future services.

Income Taxes

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

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 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 the COVID-19 Pandemic, Including on the Oil and Gas Industry” 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 each of June 30, 2021 and December 31, 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.

Earnings (Loss) per Share

Earnings (loss) per Share: We compute basic and diluted EPS in accordance with the two-class method. We include restricted stock units granted to employees and directors 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 ordinary share equivalents outstanding in the applicable period, as if all potentially dilutive securities were converted into Ordinary Shares (using the treasury stock method).

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Weighted average Ordinary Shares outstanding for basic EPS		13,115		13,115		13,115		13,115
Restricted share equity awards		—		—		—		—
Adjusted weighted average Ordinary Shares outstanding for diluted EPS		13,115		13,115		13,115		13,115

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Restricted share equity awards		218		200		218		200
Future potentially dilutive Ordinary Shares excluded from diluted EPS		218		200		218		200

Functional Currency

Functional Currency: We consider USD to be the functional currency for all of our operations since the majority of our revenues and 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 three and six months ended June 30, 2021, we recognized a net loss of approximately $0.2 million and $0.8 million, respectively, related to currency exchange rates. The foreign exchange gain/loss for the three months ended June 30, 2020 related to currency exchange rates was immaterial. For the six months ended June 30, 2020, we recognized a net gain of approximately $0.1 million related to currency exchange rates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments: The fair value of our short-term financial assets and liabilities approximates the carrying amounts represented in the balance sheet principally due to the short-term nature or floating rate nature of these instruments. As of June 30, 2021, the fair value of the 9.25% First Lien Notes was approximately $302.3 million based on quoted market prices in a less active market, a Level 2 measurement.

Share-based Compensation

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.

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 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

Recently Adopted Accounting Standards:

In December 2019, the FASB issued ASU No. 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

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. 

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Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Schedule of Carrying Amounts of Assets and Liabilities of VIE

The carrying amount associated with ADVantage was as follows:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	4,152	$	7,072
Non-current assets		87		84
Current liabilities		918		3,979
Non-current liabilities		949		741
Net carrying amount	$	2,372	$	2,436

Schedule of Reconciliation of Number of Shares Used for Basic and Diluted EPS Computations

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Weighted average Ordinary Shares outstanding for basic EPS		13,115		13,115		13,115		13,115
Restricted share equity awards		—		—		—		—
Adjusted weighted average Ordinary Shares outstanding for diluted EPS		13,115		13,115		13,115		13,115

Schedule of Number of Shares Excluded from Diluted EPS Computations

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Restricted share equity awards		218		200		218		200
Future potentially dilutive Ordinary Shares excluded from diluted EPS		218		200		218		200

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2021

Revenue From Contract With Customer [Abstract]

Schedule of Disaggregated by Revenue

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

	Three Months Ended June 30, 2021								Three Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	17,473	$	8,968	$	497	$	26,938	$	14,722	$	15,047	$	252	$	30,021
Amortized revenue		5,214		—		—		5,214		771		2,611		—		3,382
Reimbursable revenue		2,400		311		738		3,449		949		2,341		82		3,372
Total revenue	$	25,087	$	9,279	$	1,235	$	35,601	$	16,442	$	19,999	$	334	$	36,775
	Six Months Ended June 30, 2021								Six Months Ended June 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	26,371	$	17,795	$	595	$	44,761	$	38,708	$	34,778	$	798	$	74,284
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		5,214		—		—		5,214		867		3,117		—		3,984
Reimbursable revenue		4,722		332		738		5,792		4,174		4,896		417		9,487
Total revenue	$	36,307	$	18,127	$	1,333	$	55,767	$	44,225	$	42,791	$	1,215	$	88,231

Schedule of Contract Cost Assets and Contract Revenue Liabilities from Contracts with Customers

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	3,169	$	2,905
Noncurrent contract cost assets		304		—
Current contract revenue assets		1,234		—
Current contract revenue liabilities		14,406		5,100

Schedule of Significant Changes in Contract Cost Assets and Contract Revenue Liabilities

Significant changes in contract cost assets and contract revenue liabilities during the six months ended June 30, 2021 are as follows:

	Contract Cost Assets			Contract Revenue Assets		Contract Revenues
(unaudited, in thousands)
Balance as of December 31, 2020	$	2,905		$	—	$	5,100
Increase (decrease) due to contractual changes		3,758			1,234		13,326
Decrease due to recognition of revenue		(3,190	)		—		(4,020	)
Balance as of June 30, 2021 (1)	$	3,473		$	1,234	$	14,406

(1)We expect to recognize contract revenues of approximately $10.6 million during the remaining six months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of June 30, 2021.

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Leases (Tables)

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Components of Lease Expense

The components of lease expense were as follows:

		Three Months Ended June 30,						Six Months Ended June 30,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020			2021			2020
Operating lease cost(1)	Operating costs	$	713		$	831		$	1,615		$	1,797
Operating lease cost(1)	General and administrative		151			151			303			303
Sublease income	Operating costs		(121	)		(121	)		(242	)		(242	)
Sublease income	General and administrative		(62	)		(62	)		(124	)		(124	)
Total operating lease cost		$	681		$	799		$	1,552		$	1,734

(1)  Short-term lease costs were approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2021, respectively, and $0.1 million and $0.3 million during the three and six months ended June 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

Schedule of Operating Leases Included in Consolidated Balance Sheet

(unaudited, in thousands)	Classification in the Consolidated Balance Sheet	June 30, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	3,144	$	3,997
Total leased assets		$	3,144	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,927	$	2,038
Noncurrent operating	Other long-term liabilities		1,596		2,371
Total lease liabilities		$	3,523	$	4,409

Schedule of Maturities of Operating Lease Liabilities

As of June 30, 2021, maturities of lease liabilities were as follows:

(unaudited, in thousands)	Operating Leases
Remaining six months of 2021	$	1,172
2022		1,713
2023		949
2024		—
2025		—
Total future lease payments	$	3,834
Less imputed interest		(311	)
Present value of lease obligations	$	3,523

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Debt (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Long-term Debt

Our debt was composed of the following as of the dates indicated:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
9.25% First Lien Notes, net of financing costs of $3,962 and $4,781, respectively	$	346,038	$	345,219
Less current maturities of long-term debt		—		—
Long-term debt, net	$	346,038	$	345,219

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Supplemental Financial Information (Tables)

6 Months Ended

Jun. 30, 2021

Balance Sheet Related Disclosures [Abstract]

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable	$	5,721	$	6,797
Assets held for sale (1)		—		10,113
Other receivables		677		1,517
Income tax receivable		1,553		826
Prepaid insurance		1,302		386
Current deferred contract costs		3,169		2,905
Current contract asset		1,234		—
Other		6,556		6,607
	$	20,212	$	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 as of the dates indicated:  

	June 30, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	776,507		$	774,813
Assets under construction		1,463			561
Office and technology equipment		18,405			18,405
Leasehold improvements		703			1,165
		797,078			794,944
Accumulated depreciation		(306,337	)		(278,562	)
Property and equipment, net	$	490,741		$	516,382

Other Assets

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	5,165	$	4,546
Deferred certification costs		5,382		4,535
Deferred income taxes		1,818		1,923
Other noncurrent assets		2,950		1,122
	$	15,315	$	12,126

Other Current Liabilities

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	4,136	$	4,139
Compensation (1)		3,754		7,128
Income taxes payable		5,272		2,951
Current deferred revenue		14,406		5,100
Current portion of operating lease liabilities		1,927		2,038
Other		3,077		3,378
	$	32,572	$	24,734

(1)  Includes $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

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	1,101	$	970
2016 MIP - Dividend Equivalents (1)		8,765		8,006
Noncurrent operating lease liabilities		1,596		2,371
Other non-current liabilities		2,509		3,664
	$	13,971	$	15,011

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

Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statement of Cash Flows as of the dates indicated:

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Cash and cash equivalents	$	111,424	$	141,945
Restricted cash		7,800		7,996
Restricted cash included within Other Assets		5,165		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	124,389	$	154,487

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Business Segment and Significant Customer Information (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Summary of Revenue by Country

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
(unaudited, in thousands)
India	$	9,297	$	9,203	$	18,152	$	18,884
Montenegro		16,253		—		16,306		—
Qatar		7,697		—		14,894		8,975
Indonesia		—		5,834		—		—
Congo		—		4,852		—		12,433
Gabon		—		—		—		9,133
Lebanon		—		10,816		—		17,121
Other countries (1)		2,354		6,070		6,415		21,685
Total revenues	$	35,601	$	36,775	$	55,767	$	88,231

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

Schedule of Property and Equipment, Net by Country

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

	June 30, 2021		December 31, 2020
(unaudited, in thousands)
Mediterranean	$	182,083	$	225,484
India		104,160		111,485
Indonesia		66,454		69,434
Other countries (1)		138,044		109,979
Total property and equipment	$	490,741	$	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.

XML

Organization and Recent Events - Additional Information (Detail) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($) Deepwater	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Organization And Recent Events [Line Items]
Property held for sale | $	$ 13,557	$ 0
Titanium Explorer
Organization And Recent Events [Line Items]
Property held for sale | $			$ 13,800
Aquadrill LLC | Operations, Management and Marketing Agreements
Organization And Recent Events [Line Items]
Number of deepwater floaters owned	4
Aquadrill LLC | Operations, Management and Marketing Agreements | Drillships
Organization And Recent Events [Line Items]
Number of deepwater floaters owned	2
Aquadrill LLC | Operations, Management and Marketing Agreements | Semisubmersibles
Organization And Recent Events [Line Items]
Number of deepwater floaters owned	2

XML

Basis of Presentation and Significant Accounting Policies - Schedule of Carrying Amounts of Assets and Liabilities of VIE (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Variable Interest Entity [Line Items]
Current assets	$ 221,987	$ 253,670
Current liabilities	60,836	50,200
ADVantage
Variable Interest Entity [Line Items]
Current assets	4,152	7,072
Non-current assets	87	84
Current liabilities	918	3,979
Non-current liabilities	949	741
Net carrying amount	$ 2,372	$ 2,436

XML

Basis of Presentation and Significant Accounting Policies - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Basis Of Presentation And Significant Accounting Policies [Line Items]
Net gain (loss) on sale or retirement of assets			$ 2,715,000	$ 0
Capitalized interest	$ 0	$ 0	0	0
Allowance for doubtful accounts	5,000,000.0		5,000,000.0		$ 5,000,000.0
Foreign currency transaction gain (loss)	(200,000)		$ (800,000)	$ 100,000
TBGs
Basis Of Presentation And Significant Accounting Policies [Line Items]
Vesting period			4 years
Terms of TBGs vesting and settlement			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
Basis Of Presentation And Significant Accounting Policies [Line Items]
Vesting period			7 years
9.25% First Lien Notes
Basis Of Presentation And Significant Accounting Policies [Line Items]
Fair value of notes outstanding	$ 302,300,000		$ 302,300,000
Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Term of customer invoice payment			30 days
Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Term of customer invoice payment			45 days
Drilling Equipment | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property, plant and equipment, useful lives			5 years
Drilling Equipment | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property, plant and equipment, useful lives			35 years
Office and Technology Equipment | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property, plant and equipment, useful lives			3 years
Office and Technology Equipment | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property, plant and equipment, useful lives			7 years

XML

Basis of Presentation and Significant Accounting Policies - Schedule of Reconciliation of Number of Shares Used For Basic and Diluted EPS Computation (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Basis Of Presentation And Significant Accounting Policies [Line Items]
Weighted average Ordinary Shares outstanding for basic EPS	13,115,000	13,115,000	13,115	13,115
Adjusted weighted average Ordinary Shares outstanding for diluted EPS	13,115,000	13,115,000	13,115	13,115
Restricted Shares Equity Award
Basis Of Presentation And Significant Accounting Policies [Line Items]
Restricted share equity awards	0	0	0	0

XML

Basis of Presentation and Significant Accounting Policies - Schedule of Number of Shares Excluded from Diluted EPS Computation (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Basis Of Presentation And Significant Accounting Policies [Line Items]
Future potentially dilutive Ordinary Shares excluded from diluted EPS	218	200	218	200
Restricted Shares Equity Award
Basis Of Presentation And Significant Accounting Policies [Line Items]
Future potentially dilutive Ordinary Shares excluded from diluted EPS	218	200	218	200

XML

Revenue from Contracts with Customers - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2021
Minimum
Disaggregation Of Revenue [Line Items]
Term of customer invoice payment	30 days
Maximum
Disaggregation Of Revenue [Line Items]
Term of customer invoice payment	45 days

XML

Revenue from Contracts with Customers - Schedule of Disaggregated by Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation Of Revenue [Line Items]
Total revenue	$ 35,601	$ 36,775	$ 55,767	$ 88,231
Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	25,087	16,442	36,307	44,225
Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	9,279	19,999	18,127	42,791
Management
Disaggregation Of Revenue [Line Items]
Total revenue	1,235	334	1,333	1,215
Dayrate Revenue
Disaggregation Of Revenue [Line Items]
Total revenue	26,938	30,021	44,761	74,284
Dayrate Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	17,473	14,722	26,371	38,708
Dayrate Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	8,968	15,047	17,795	34,778
Dayrate Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue	497	252	595	798
Charter Lease Revenue
Disaggregation Of Revenue [Line Items]
Total revenue			0	476
Charter Lease Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue			0	476
Charter Lease Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue			0	0
Charter Lease Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue			0	0
Amortized Revenue
Disaggregation Of Revenue [Line Items]
Total revenue	5,214	3,382	5,214	3,984
Amortized Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	5,214	771	5,214	867
Amortized Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	0	2,611	0	3,117
Amortized Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue	0	0	0	0
Reimbursable Revenue
Disaggregation Of Revenue [Line Items]
Total revenue	3,449	3,372	5,792	9,487
Reimbursable Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	2,400	949	4,722	4,174
Reimbursable Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	311	2,341	332	4,896
Reimbursable Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue	$ 738	$ 82	$ 738	$ 417

XML

Revenue from Contracts with Customers - Schedule of Contract Cost Assets and Contract Revenue Liabilities from Contracts with Customers (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Revenue From Contract With Customer [Abstract]
Current contract cost assets	$ 3,169	$ 2,905
Noncurrent contract cost assets	304	0
Current contract revenue assets	1,234	0
Current contract revenue liabilities	$ 14,406	$ 5,100

XML

Revenue from Contracts with Customers - Schedule of Significant Changes in Contract Cost Assets and Contract Revenue Liabilities (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)
Revenue From Contract With Customer [Abstract]
Beginning balance, contract cost assets	$ 2,905
Increase (decrease) due to contractual changes, contract cost assets	3,758
Decrease due to recognition of revenue, contract cost asset assets	(3,190)
Ending balance, contract cost assets	3,473
Beginning balance, contract revenue assets	0
Increase (decrease) due to contractual changes, contract revenue assets	1,234
Decrease due to recognition of revenue, contract revenue assets	0
Ending balance, contract revenue assets	1,234
Beginning balance, contract revenues	5,100
Increase (decrease) due to contractual changes, contract revenues	13,326
Decrease due to recognition of revenue, contract revenues	(4,020)
Ending balance, contract revenues	$ 14,406

XML

Revenue from Contracts with Customers - Schedule of Significant Changes in Contract Cost Assets and Contract Revenue Liabilities (Parenthetical) (Detail) $ in Millions	Jun. 30, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-07-01
Disaggregation Of Revenue [Line Items]
Contract revenues, remaining performance obligation	$ 10.6
Contract revenues, remaining performance obligation, expected timing of satisfaction, period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01
Disaggregation Of Revenue [Line Items]
Contract revenues, remaining performance obligation	$ 3.8
Contract revenues, remaining performance obligation, expected timing of satisfaction, period

XML

Leases - Components of Lease Expense (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Lessee Lease Description [Line Items]
Total operating lease cost		$ 681	$ 799	$ 1,552	$ 1,734
Operating Costs
Lessee Lease Description [Line Items]
Total operating lease cost	[1]	713	831	1,615	1,797
Sublease income		(121)	(121)	(242)	(242)
General and Administrative
Lessee Lease Description [Line Items]
Total operating lease cost	[1]	151	151	303	303
Sublease income		$ (62)	$ (62)	$ (124)	$ (124)

[1] Short-term lease costs were approximately $0.1 million and $0.2 million during the three and six months ended June 30, 2021, respectively, and $0.1 million and $0.3 million during the three and six months ended June 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

XML

Leases - Components of Lease Expense (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Leases [Abstract]
Short term lease costs	$ 0.1	$ 0.1	$ 0.2	$ 0.3

XML

Leases - Schedule of Operating Leases Included in Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Assets:
Operating lease assets	$ 3,144	$ 3,997
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Operating lease assets	Operating lease assets
Liabilities:
Current operating	$ 1,927	$ 2,038
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities	Other current liabilities
Noncurrent operating	$ 1,596	$ 2,371
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:LiabilitiesOtherThanLongtermDebtNoncurrent	us-gaap:LiabilitiesOtherThanLongtermDebtNoncurrent
Total lease liabilities	$ 3,523	$ 4,409

XML

Leases - Schedule of Maturities of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Leases [Abstract]
Remaining nine months of 2021	$ 1,172
2022	1,713
2023	949
2024	0
2025	0
Total future lease payments	3,834
Less imputed interest	(311)
Present value of lease obligations	$ 3,523	$ 4,409

XML

Leases - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($)
Leases [Abstract]
Weighted average discount rate for operating leases	9.25%
Weighted average remaining lease term for operating leases	1 year 11 months 1 day
ROU assets obtained in exchange of operating lease liability	$ 0.3

XML

Debt - Long-Term Debt (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Less current maturities of long-term debt	$ 0	$ 0
Long-term debt, net	346,038	345,219
9.25% First Lien Notes
Debt Instrument [Line Items]
Long-term debt	$ 346,038	$ 345,219

XML

Debt - Long-Term Debt (Parenthetical) (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
9.25% First Lien Notes
Debt Instrument [Line Items]
Debt financing cost	$ 3,962	$ 4,781

XML

Debt - 9.25% First Lien Notes - Additional Information (Detail) - 9.25% First Lien Notes - USD ($) $ in Millions	Nov. 30, 2018	Jun. 30, 2021
Debt Instrument [Line Items]
Issuance of debt	$ 350.0
Debt instrument, interest rate		9.25%
Letters of credit		$ 11.0
New Letter of Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	50.0
First Payment [Member] | Maximum
Debt Instrument [Line Items]
Repayments of debt	$ 50.0

XML

Shareholders' Equity - Additional Information (Detail) - USD ($)		6 Months Ended
	Dec. 04, 2019	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Feb. 10, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Ordinary shares, shares authorized		50,000,000		50,000,000
Ordinary shares, shares issued		13,115,026		13,115,026	5,000,053
Additional ordinary shares issued for convertible notes	8,114,977
Ordinary shares, shares outstanding		13,115,026		13,115,026
Number of shares granted		0	0
Time-based Restricted Stock Unit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of previously granted shares vested in period		18,224
Share based compensation expense		$ 300,000	$ 1,000,000.0
Time-based Restricted Stock Unit | Special Cash Distribution
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividends cash		8,800,000
Performance-based Restricted Stock Unit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense		$ 0

XML

Income Taxes - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2021
Minimum
Income Tax Contingency [Line Items]
Open tax year	2011

XML

Commitments and Contingencies - Additional Information (Detail) R$ in Millions, $ in Millions						6 Months Ended
	Mar. 25, 2020 USD ($)	Mar. 04, 2020 USD ($)	Feb. 13, 2019 USD ($)	Apr. 27, 2018 BRL (R$) Defendant	Apr. 27, 2018 USD ($) Defendant	Jun. 30, 2021	Jun. 30, 2020 USD ($)
Brazil Improbity Action | Brazil
Loss Contingencies [Line Items]
Allegations - description						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 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, and Mr. Hsin-Chi Su, a former member of VDC’s board of 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.
Loss contingency, damages claimed				R$ 102.8	$ 21.4
Court authorization to seizure and freezing assets of defendants					$ 85.6
Loss contingency, number of defendants | Defendant				3	3
Loss contingency, actions taken by court						On February 13, 2019, the Company learned that the Brazilian Federal Prosecutor had previously requested mutual legal assistance from the U.S. DOJ pursuant to 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 $85.6 million.
Brazil Improbity Action | United States
Loss Contingencies [Line Items]
Court authorization to seizure and freezing assets of defendants			$ 85.6
Restructuring Agreement and the Associated Settlement Agreement
Loss Contingencies [Line Items]
Litigation settlement, amount awarded to other party		$ 15.0
Agreement settlement amount paid	$ 15.0
Restructuring Agreement and the Associated Settlement Agreement | Other Income
Loss Contingencies [Line Items]
Gain (loss) related to litigation settlement							$ 2.3

XML

Supplemental Financial Information - Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Prepaid Expense And Other Assets Current [Abstract]
Sales tax receivable		$ 5,721	$ 6,797
Assets held for sale	[1]	0	10,113
Other receivables		677	1,517
Income tax receivable		1,553	826
Prepaid insurance		1,302	386
Current deferred contract costs		3,169	2,905
Current contract asset		1,234	0
Other		6,556	6,607
Prepaid expenses and other current assets		$ 20,212	$ 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.

XML

Supplemental Financial Information - Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Property and equipment	$ 797,078	$ 794,944
Accumulated depreciation	(306,337)	(278,562)
Property and equipment, net	490,741	516,382
Drilling Equipment
Property Plant And Equipment [Line Items]
Property and equipment	776,507	774,813
Assets under Construction
Property Plant And Equipment [Line Items]
Property and equipment	1,463	561
Office and Technology Equipment
Property Plant And Equipment [Line Items]
Property and equipment	18,405	18,405
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment	$ 703	$ 1,165

XML

Supplemental Financial Information - Other Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Other Assets Noncurrent Disclosure [Abstract]
Noncurrent restricted cash	$ 5,165	$ 4,546
Deferred certification costs	5,382	4,535
Deferred income taxes	1,818	1,923
Other noncurrent assets	2,950	1,122
Total other assets	$ 15,315	$ 12,126

XML

Supplemental Financial Information - Other Current Liabilities (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Other Liabilities Disclosure [Abstract]
Interest		$ 4,136	$ 4,139
Compensation	[1]	3,754	7,128
Income taxes payable		5,272	2,951
Current deferred revenue		14,406	5,100
Current portion of operating lease liabilities		1,927	2,038
Other		3,077	3,378
Other current liabilities		$ 32,572	$ 24,734

[1] Includes $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.

XML

Supplemental Financial Information - Other Current Liabilities (Parenthetical) (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Other Current Liabilities [Line Items]
Compensation	[1]	$ 3,754	$ 7,128
Cash Awards To Certain Key Employees
Other Current Liabilities [Line Items]
Compensation			$ 2,100

[1] Includes $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.

XML

Supplemental Financial Information - Other Long-term Liabilities (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Liabilities Noncurrent [Abstract]
Deferred income taxes		$ 1,101	$ 970
2016 MIP - Dividend Equivalents	[1]	8,765	8,006
Noncurrent operating lease liabilities		1,596	2,371
Other non-current liabilities		2,509	3,664
Other long-term liabilities		$ 13,971	$ 15,011

[1] Dividend Equivalents on vested TBGs are payable on settlement of the applicable award.

XML

Supplemental Financial Information - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 111,424	$ 141,945
Restricted cash	7,800	7,996
Restricted cash included within Other Assets	$ 5,165	$ 4,546
Restricted Cash and Cash Equivalents, Noncurrent, Asset, Statement of Financial Position [Extensible List]	Other assets	Other assets
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$ 124,389	$ 154,487

XML

Supplemental Financial Information - Additional Information (Detail) - ADES	Jun. 30, 2021 USD ($)
Supplemental Financial Information [Line Items]
Accounts receivable from related parties	$ 0
Accounts payable to related parties	400,000
Other Current Liabilities
Supplemental Financial Information [Line Items]
Due to related parties	$ 715,000

XML

Business Segment and Significant Customer Information - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2021 Customer	Jun. 30, 2020 Customer	Jun. 30, 2021 Customer Segment	Jun. 30, 2020 Customer
Entity Wide Revenue Major Customer [Line Items]
Number of reportable segments | Segment			1
Number of customers accounted for revenues | Customer	3	4	4	5
Product Concentration Risk | Sales | Construction Supervision Services | Ultra Deep Water Drillship
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	1.00%		1.00%
Product Concentration Risk | Maximum | Sales | Construction Supervision Services | Ultra Deep Water Drillship
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)		1.00%		1.00%
Customer Concentration Risk | Sales | Customer One
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	46.00%	29.00%	33.00%	21.00%
Customer Concentration Risk | Sales | Customer Two
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	26.00%	25.00%	29.00%	19.00%
Customer Concentration Risk | Sales | Customer Three
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	17.00%	16.00%	16.00%	14.00%
Customer Concentration Risk | Sales | Customer Four
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)		13.00%	11.00%	10.00%
Customer Concentration Risk | Sales | Customer Five
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)				10.00%

XML

Business Segment and Significant Customer Information - Summary of Revenue by Country (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Entity Wide Revenue Major Customer [Line Items]
Revenues		$ 35,601	$ 36,775	$ 55,767	$ 88,231
India
Entity Wide Revenue Major Customer [Line Items]
Revenues		9,297	9,203	18,152	18,884
Montenegro
Entity Wide Revenue Major Customer [Line Items]
Revenues		16,253	0	16,306	0
Qatar
Entity Wide Revenue Major Customer [Line Items]
Revenues		7,697	0	14,894	8,975
Indonesia
Entity Wide Revenue Major Customer [Line Items]
Revenues		0	5,834	0	0
Congo
Entity Wide Revenue Major Customer [Line Items]
Revenues		0	4,852	0	12,433
Gabon
Entity Wide Revenue Major Customer [Line Items]
Revenues		0	0	0	9,133
Lebanon
Entity Wide Revenue Major Customer [Line Items]
Revenues		0	10,816	0	17,121
Other countries
Entity Wide Revenue Major Customer [Line Items]
Revenues	[1]	$ 2,354	$ 6,070	$ 6,415	$ 21,685

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

XML

Business Segment and Significant Customer Information - Schedule of Property and Equipment, Net by Country (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		$ 490,741	$ 516,382
Mediterranean
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		182,083	225,484
India
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		104,160	111,485
Indonesia
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		66,454	69,434
Other countries
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment	[1]	$ 138,044	$ 109,979

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