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 September 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 November 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 and 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;

termination or renegotiation of vendor contracts;

3

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;

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 September 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 September 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)

	September 30, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	105,468		$	141,945
Restricted cash		5,731			7,996
Trade receivables, net of allowance for doubtful accounts of $5.0 million, respectively		36,168			24,717
Materials and supplies		51,550			49,861
Prepaid expenses and other current assets		18,009			29,151
Total current assets		216,926			253,670
Property and equipment
Property and equipment		794,037			794,944
Accumulated depreciation		(316,916	)		(278,562	)
Property and equipment, net		477,121			516,382
Operating lease ROU assets		2,674			3,997
Other assets		22,088			12,126
Total assets	$	718,809		$	786,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	29,776		$	25,466
Other current liabilities		38,126			24,734
Total current liabilities		67,902			50,200
Long–term debt, net of discount and financing costs of $3,552 and $4,781, respectively		346,448			345,219
Other long-term liabilities		15,104			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		633,817			634,181
Accumulated deficit		(346,331	)		(259,655	)
Controlling interest shareholders' equity		287,499			374,539
Noncontrolling interests		1,856			1,206
Total equity		289,355			375,745
Total liabilities and shareholders' equity	$	718,809		$	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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue
Contract drilling services	$	42,982		$	18,069		$	92,362		$	95,539
Reimbursables and other		9,869			2,142			16,256			12,903
Total revenue		52,851			20,211			108,618			108,442
Operating costs and expenses
Operating costs		45,369			27,231			106,782			113,890
General and administrative		4,593			3,829			15,055			15,715
Depreciation		14,137			18,230			42,423			54,647
Loss on impairment		—			128,876			—			128,876
Total operating costs and expenses		64,099			178,166			164,260			313,128
Loss from operations		(11,248	)		(157,955	)		(55,642	)		(204,686	)
Other (expense) income
Interest income		8			41			118			853
Interest expense and other financing charges		(8,508	)		(8,510	)		(25,529	)		(25,531	)
Other, net		(1,108	)		(46	)		(1,901	)		2,321
Total other expense		(9,608	)		(8,515	)		(27,312	)		(22,357	)
Loss before income taxes		(20,856	)		(166,470	)		(82,954	)		(227,043	)
Income tax provision		881			2,855			3,763			4,752
Net loss		(21,737	)		(169,325	)		(86,717	)		(231,795	)
Net (loss) income attributable to noncontrolling interests		(10	)		2			(41	)		16
Net loss attributable to shareholders	$	(21,727	)	$	(169,327	)	$	(86,676	)	$	(231,811	)
Loss per share
Basic and Diluted	$	(1.66	)	$	(12.91	)	$	(6.61	)	$	(17.68	)

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)

	Nine-Month Period Ended September 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
Share-based compensation		—		—		330			—						330
Net (loss) income		—		—		—			(169,327	)		2			(169,325	)
Balance September 30, 2020		13,115	$	13	$	633,924		$	(214,747	)	$	1,260		$	420,450
	Nine-Month Period Ended September 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
Share-based compensation		—		—		29			—			—			29
Share-based compensation - dividend equivalents		—		—		30			—			—			30
Contributions from holders of noncontrolling interests (see Note 10)		—		—		—			—			691			691
Net loss		—		—		—			(21,727	)		(10	)		(21,737	)
Balance September 30, 2021		13,115	$	13	$	633,817		$	(346,331	)	$	1,856		$	289,355

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

8

Vantage Drilling International

Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(86,717	)	$	(231,795	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense		42,423			54,647
Amortization of debt financing costs		1,229			1,229
Share-based compensation expense		366			1,358
Deferred income tax (benefit) expense		357			(36	)
Loss (gain) on disposal of assets		(2,710	)		52
Gain on settlement of restructuring agreement		—			(2,278	)
Loss on impairment		—			128,876
Changes in operating assets and liabilities:
Trade receivables, net		(11,451	)		7,394
Materials and Supplies		(2,084	)		(1,924	)
Prepaid expenses and other current assets		762			483
Other assets		(4,207	)		4,250
Accounts payable		4,310			(20,734	)
Other current liabilities and other long-term liabilities		13,243			(2,598	)
Net cash used in operating activities		(44,479	)		(61,076	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment		(3,232	)		(2,634	)
Net proceeds from sale of Titanium Explorer		13,557			—
Net cash provided by (used in) investing activities		10,325			(2,634	)
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		(34,154	)		(63,710	)
Unrestricted and restricted cash and cash equivalents—beginning of period		154,487			242,944
Unrestricted and restricted cash and cash equivalents—end of period	$	120,333		$	179,234
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest	$	16,197		$	16,201
Income taxes (net of refunds)		2,350			6,918
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 global spread of COVID-19, including its highly contagious variants and sub-lineages, continues to pose significant risks and challenges worldwide, and has caused and continues to cause widespread illness and significant loss of life, leading governments across the world to impose and re-impose severely stringent and extensive limitations on movement and human interaction, with certain countries, including those where we maintain significant operations and derive material revenue, 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.

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

The markets have generally exhibited a strong recovery in global oil prices for the first nine months 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.

In the fourth quarter 2021, one of our subsidiaries and a subsidiary of Aquadrill have reached an agreement to provide the West Capella, a 6th generation drillship outfitted with a managed pressure drilling system, for a two well contract plus two priced optional wells for operations in Indonesia. The drilling campaign is expected to commence in the first quarter of 2022, following the completion of the West Capella's current contract after the rig transitions to Vantage management and relocates to Indonesia. Vantage will earn its fees pursuant to its management and marketing agreements with Aquadrill.

10

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 Sheets. 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 (the “New ONGC Contract”) from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer concluded its prior three-year contract with ONGC in August 2021 and after being briefly out-of-service, is expected to commence the New ONGC Contract during the fourth quarter of 2021.

2. Basis of Presentation and Significant Accounting Policies

Basis of Consolidation: The accompanying interim consolidated financial information as of September 30, 2021 and for the three and nine months ended September 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. Our 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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	3,869	$	7,072
Non-current assets		87		84
Current liabilities		117		3,979
Non-current liabilities		79		741
Net carrying amount	$	3,760	$	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

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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 our Consolidated Balance Sheets 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 nine months ended September 30, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three and nine months ended September 30, 2021, the gain/loss related to the sale or retirement of assets was immaterial. In the three and nine months ended September 30, 2020, we recognized a net loss of approximately $0.1 million related to the sale or retirement of assets.

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 September 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

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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 September 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 September 30,				Nine Months Ended September 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 September 30,				Nine Months Ended September 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 nine months ended September 30, 2021, we recognized a net loss of approximately $1.1 million and $1.9 million, respectively, related to currency exchange rates. The foreign exchange gain/loss for the three and nine months ended September 30, 2020 related to currency exchange rates was immaterial.

Fair Value of Financial Instruments: The fair value of our short-term financial assets and liabilities approximates the carrying amounts represented in our Consolidated Balance Sheets principally due to the short-term nature or floating rate nature of these instruments. As of September 30, 2021, the fair value of the 9.25% First Lien Notes was approximately $319.7 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

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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. 

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 September 30, 2021								Three Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	32,596	$	5,307	$	690	$	38,593	$	10,220	$	6,239	$	—	$	16,459
Amortized revenue		5,079		—		—		5,079		1,022		588		—		1,610
Reimbursable revenue		4,905		577		3,697		9,179		1,817		325		—		2,142
Total revenue	$	42,580	$	5,884	$	4,387	$	52,851	$	13,059	$	7,152	$	—	$	20,211
	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	58,967	$	23,102	$	1,285	$	83,354	$	48,928	$	41,017	$	798	$	90,743
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		10,293		—		—		10,293		1,889		3,705		—		5,594
Reimbursable revenue		9,627		909		4,435		14,971		5,991		5,221		417		11,629
Total revenue	$	78,887	$	24,011	$	5,720	$	108,618	$	57,284	$	49,943	$	1,215	$	108,442

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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	201	$	2,905
Noncurrent contract cost assets		3,015		—
Current contract revenue assets		2,463		—
Current contract revenue liabilities		10,590		5,100

Significant changes in contract cost assets and contract revenue liabilities during the nine months ended September 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		6,542			2,463		16,010
Decrease due to recognition of revenue		(6,231	)		—		(10,520	)
Balance as of September 30, 2021 (1)	$	3,216		$	2,463	$	10,590

(1)We expect to recognize contract revenues of approximately $6.8 million during the remaining three months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of September 30, 2021.

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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.

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 Sheets. 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 September 30,						Nine Months Ended September 30,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020			2021			2020
Operating lease cost(1)	Operating costs	$	408		$	850		$	2,023		$	2,647
Operating lease cost(1)	General and administrative		152			152			455			455
Sublease income	Operating costs		(121	)		(121	)		(363	)		(363	)
Sublease income	General and administrative		(62	)		(62	)		(186	)		(186	)
Total operating lease cost		$	377		$	819		$	1,929		$	2,553

(1) Short-term lease costs were approximately $0.1 million and $0.3 million during the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.4 million during the three and nine months ended September 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

(unaudited, in thousands)	Classification in the Consolidated Balance Sheets	September 30, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	2,674	$	3,997
Total leased assets		$	2,674	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,751	$	2,038
Noncurrent operating	Other long-term liabilities		1,209		2,371
Total lease liabilities		$	2,960	$	4,409

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

(unaudited, in thousands)	Operating Leases
Remaining three months of 2021	$	533
2022		1,714
2023		949
2024		—
2025		—
Total future lease payments	$	3,196
Less imputed interest		(236	)
Present value of lease obligations	$	2,960

As of September 30, 2021, the weighted average discount rate and the weighted average remaining lease term for operating leases was 9.25% and 1.75 years, respectively. ROU assets and lease liabilities recorded for leases commencing during the three months ended September 30, 2021 was immaterial.

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 nine months ended September 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,

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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.

5. Debt

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
9.25% First Lien Notes, net of financing costs of $3,552 and $4,781, respectively	$	346,448	$	345,219
Less current maturities of long-term debt		—		—
Long-term debt, net	$	346,448	$	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 $8.8 million in letters of credit under this facility as of September 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 September 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 nine months ended September 30, 2021 and 2020. During the nine months ended September 30, 2021, 18,224 of previously-granted TBGs vested.

Both the TBGs and PBGs are classified as equity awards. For the nine months ended September 30, 2021 and 2020, we recognized share-based compensation expense related to the TBGs of approximately $0.4 million and $1.4 million, respectively. As of September 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

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Amended MIP. As a result of a special cash distribution paid to shareholders of record on December 17, 2019, $8.7 million has been recorded in “Other long-term liabilities” in our Consolidated Balance Sheets at September 30, 2021 to be paid upon settlement of the TBGs.

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 September 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 things, expand and extend the refundable employee retention tax credits previously made available under the CARES Act. As of September 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

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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 $19.6 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 $78.3 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 $78.3 million.

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 and 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 has defended, and intends to continue to vigorously defend against the allegations made in the Improbity Action and oppose and defend against any attempts to seize the Company's assets. 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 nine months ended September 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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable	$	6,297	$	6,797
Assets held for sale (1)		—		10,113
Other receivables		539		1,517
Income tax receivable		1,523		826
Prepaid insurance		748		386
Current deferred contract costs		201		2,905
Current contract asset		2,463		—
Other		6,238		6,607
	$	18,009	$	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:

	September 30, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	773,300		$	774,813
Assets under construction		1,744			561
Office and technology equipment		18,405			18,405
Leasehold improvements		588			1,165
		794,037			794,944
Accumulated depreciation		(316,916	)		(278,562	)
Property and equipment, net	$	477,121		$	516,382

Other Assets

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	9,134	$	4,546
Deferred certification costs		5,531		4,535
Noncurrent deferred contract costs		3,015		—
Deferred income taxes		1,768		1,923
Other noncurrent assets		2,640		1,122
	$	22,088	$	12,126

Other Current Liabilities

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	12,233	$	4,139
Compensation (1)		6,331		7,128
Income taxes payable		6,168		2,951
Current deferred revenue		10,590		5,100
Current portion of operating lease liabilities		1,751		2,038
Other		1,053		3,378
	$	38,126	$	24,734

(1) Includes $1.2 million as of September 30, 2021 and $2.1 million as of December 31, 2020 related to cash awards granted to certain key employees of the Company pursuant to underlying award agreements and issued under the 2016 Amended MIP.

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Other Long-term Liabilities

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	1,171	$	970
2016 MIP - Dividend Equivalents (1)		8,735		8,006
Noncurrent operating lease liabilities		1,209		2,371
Other non-current liabilities		3,989		3,664
	$	15,104	$	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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Cash and cash equivalents	$	105,468	$	141,945
Restricted cash		5,731		7,996
Restricted cash included within Other Assets		9,134		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	120,333	$	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 in the approximate amount of $691,000 in 2019 to ADVantage in excess of the issued capital of the joint venture, with the understanding that such amounts were to be considered shareholder loans. The excess cash contribution and accrued interest were included in “Other current liabilities” on the Consolidated Balance Sheets. On July 29, 2021, the excess cash contribution to ADVantage was reflected on the commercial register of ADVantage in Egypt. As such, the amount was converted to capital contributions and reclassified from “Other current liabilities” to “Additional paid-in capital” on the Consolidated Balance Sheets.

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 September 30, 2021, accounts payable to ADES totaled approximately $0.8 million, included in “Accounts payable,” on the Consolidated Balance Sheets. There were no outstanding accounts receivable from ADES as of September 30, 2021.

One of our shareholders that owns a significant portion of our Ordinary shares also owns an interest in Aquadrill.

We did not have any related party transactions that were not conducted in the ordinary course of business as of September 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 nine months ended September 30, 2021, respectively, and less than 1% of the total revenue for the three and nine months ended September 30, 2020, respectively.

For the three and nine months ended September 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

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in foreign operations. Six customers accounted for approximately 28%, 16%, 14%, 11%, 11% and 11% of consolidated revenue for the three months ended September 30, 2021 and three customers accounted for approximately 29%, 22% and 12% of consolidated revenue for the nine months ended September 30, 2021. Three customers accounted for approximately 34%, 31% and 29% of consolidated revenue for the three months ended September 30, 2020, and five customers accounted for approximately 24%, 16%, 14%, 12% and 12% of the consolidated revenue for the nine months ended September 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
(unaudited, in thousands)
Montenegro	$	14,887	$	—	$	31,193	$	—
India		5,884		6,933		24,036		25,817
Qatar		7,932		5,805		22,826		14,780
Equatorial Guinea		8,474		—		—		—
Indonesia		5,591		6,294		—		14,476
Congo		—		—		—		13,272
Malaysia		5,692		—		—		—
Lebanon		—		—		—		17,347
Other countries (1)		4,391		1,179		30,563		22,750
Total revenues	$	52,851	$	20,211	$	108,618	$	108,442

(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”):

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Mediterranean	$	177,595	$	225,484
India		100,365		111,485
Indonesia		64,990		69,434
Other countries (1)		134,171		109,979
Total property and equipment	$	477,121	$	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 September 30, 2021 and our results of operations for the three and nine months ended September 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 November 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	Reactivation

(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 global spread of COVID-19, including its highly contagious variants and sub-lineages, continues to pose significant risks and challenges worldwide, and has caused and continues to cause widespread illness and significant loss of life, leading governments across the world to impose and re-impose severely stringent and extensive limitations on movement and human interaction, with certain countries, including those where we maintain significant operations and derive material revenue, 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.

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

The markets have generally exhibited a strong recovery in global oil prices for the first nine months 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

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

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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.

In the fourth quarter 2021, one of our subsidiaries and a subsidiary of Aquadrill have reached an agreement to provide the West Capella, a 6th generation drillship outfitted with a managed pressure drilling system, for a two well contract plus two priced optional wells for operations in Indonesia. The drilling campaign is expected to commence in the first quarter of 2022, following the completion of the Capella’s current contract after the rig transitions to Vantage management and relocates to Indonesia. Vantage will earn its fees pursuant to its management and marketing agreements with Aquadrill.

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 Sheets. 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 (the “New ONGC Contract”) from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer concluded its prior three-year contract with ONGC in August 2021 and, after being briefly out-of-service, is expected to commence the New ONGC Contract during the fourth quarter of 2021.

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 decline 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. As a whole, global oil prices experienced a strong recovery in the first nine months of 2021, with Brent crude oil trading above $84.00 per barrel in October 2021, as compared to the low prices experienced in 2020. This recovery is 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, and their recent agreement to boost production, but only in measured steps, (ii) development, efficacy, availability and utilization of vaccines for COVID-19, (iii) the reopening of global economies, (iv) injection of substantial government monetary and fiscal stimulus and (v) the ongoing energy supply crisis driven by a shortage of fuel within recovering economies and anticipated extreme weather across Europe and northeast Asia, along with years of under investment in oil reserve replacement. Notwithstanding the foregoing, the volatility and uncertainty surrounding global oil prices largely remain as the spread of the COVID-19 pandemic and its highly transmissible variants persist and, as a whole, the oil and gas industry continues to be impacted and shaped by external factors which have influenced its overall development and recovery. While OPEC+ countries entered into an agreement in July 2021 to gradually phase out certain oil production cuts by September 2022 and subsequently acknowledged that it would continue to observe such agreement to only boost production modestly despite higher oil prices, the long-term commitment of such countries to maintain oil production at or near such levels 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. 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 drilling contractors began removing older, less competitive, rigs from their fleets by either cold stacking the drilling rigs, repurposing rigs for use in other industries or taking them permanently out of service. This trend has accelerated since the second quarter of 2020, with a substantial number of rigs removed from the drilling fleet since the

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oil price decline in 2014. However, we are seeing several instances where cold-stacked rigs are being reactivated for new contracts as the supply of ready-to-go rigs shrinks. This could result in more rigs competing in the market, and in turn cause dayrates to remain under pressure, which may impact the environment in which we compete.

In addition 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. As drillers emerge from these debt restructurings, it is likely that consolidation will occur, reducing the number of industry participants, lowering cost structures. The combination of recycling, restructuring and consolidation will be necessary for the industry to regain firmer footing. As such, we are monitoring the recent trend by some drilling contractors to reactivate cold stacked rigs and the impact on the market. Any industry recovery will also depend significantly on continued and demonstrable improvement in global macroeconomic conditions including the ability to mitigate COVID-19's highly contagious variants and mutations.

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 generally improved during the first nine months 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 as a whole reached healthier levels in 2021 as compared to 2020. As a result, the jackup segment has already experienced visible recovery in 2021 and the deepwater segment has started to exhibit signs of near- to -medium term recovery. 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 COVID-19 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 September 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	89%	61%		94	%	$	29,912	$	90,532	$	115,134
Drillships	58%	62%		40	%	$	17,916	$	69,738	$	42,310

(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 September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Jackups
Rigs available (at end of period)		5			5			5			5
Available days (1)		460			460			1,365			1,335
Utilization (2)		98.7	%		40.0	%		56.9	%		62.2	%
Average daily revenues (3)	$	82,975		$	61,159		$	89,250		$	61,186
Deepwater
Rigs available		2			3			2			3
Available days (1)		184			276			546			822
Utilization (2)		28.5	%		28.2	%		42.4	%		45.1	%
Average daily revenues (3)	$	101,128		$	87,650		$	99,907		$	120,521

(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 September 30, 2021 and 2020

Net loss attributable to shareholders for the Current Quarter was $21.7 million, or $1.66 per basic share, on operating revenues of $52.9 million, compared to net loss attributable to shareholders for the Comparable Quarter of $169.3 million, or $12.91 per basic share, on operating revenues of $20.2 million.

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

	Three Months Ended September 30,						Change
	2021			2020			$			%
(unaudited, in thousands)
Revenues
Contract drilling services	$	42,982		$	18,069		$	24,913			138	%
Reimbursables and other		9,869			2,142			7,727			361	%
Total revenues		52,851			20,211			32,640			161	%
Operating costs and expenses
Operating costs		45,369			27,231			18,138			67	%
General and administrative		4,593			3,829			764			20	%
Depreciation		14,137			18,230			(4,093	)		-22	%
Loss on impairment		—			128,876			(128,876	)		-100	%
Total operating costs and expenses		64,099			178,166			(114,067	)		-64	%
Loss from operations		(11,248	)		(157,955	)		146,707			-93	%
Other (expense) income
Interest income		8			41			(33	)		-80	%
Interest expense and financing charges		(8,508	)		(8,510	)		2			0	%
Other, net		(1,108	)		(46	)		(1,062	)		2309	%
Total other expense		(9,608	)		(8,515	)		(1,093	)		13	%
Loss before income taxes		(20,856	)		(166,470	)		145,614			-87	%
Income tax provision		881			2,855			(1,974	)		-69	%
Net loss		(21,737	)		(169,325	)		147,588			-87	%
Net income (loss) attributable to noncontrolling interests		(10	)		2			(12	)		-600	%
Net loss attributable to shareholders	$	(21,727	)	$	(169,327	)	$	147,600			-87	%

Revenue: Total revenue increased $32.6 million due primarily to an increase in operating activities in the Current Quarter.

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Contract drilling revenue increased $24.9 million for the Current Quarter as compared to the Comparable Quarter. The increase 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 six in the Current Quarter as compared to three 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; (ii) another drilling contract expired in the second quarter of 2020 in accordance with its terms; and (iii) another drilling contract was amended to reduce the applicable dayrate in the Comparable Quarter.

Reimbursables and other revenue for the Current Quarter increased 361% as compared to the Comparable Quarter primarily as a result of the number of our rigs which were operational as discussed immediately above 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 increased $18.1 million as compared to the Comparable Quarter. The increase in Operating costs was primarily the result of the changes in our drilling contracts discussed immediately above.

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, contract labor costs 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 22% 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 and subsequently sold on March 10, 2021.

Loss on impairment: During the Comparable Quarter, we evaluated our deepwater drilling rigs that had indicators of impairment and determined that the carrying value of our longer-term warm stacked drillship, the Titanium Explorer, was impaired. As a result, we recognized a non-cash loss on impairment of $128.9 million during the Comparable Period.

Interest income: Decreases in interest income for the Current Quarter as compared to the Comparable Quarter were due primarily to lower interest rates earned on lower cash investments during the Current Quarter.

Interest expense and financing charges: Interest expense and financing charges 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 $1.1 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 8.01% based on estimated annualized loss before income taxes excluding income tax discrete items. Our annualized effective tax rate for the Comparable Quarter was negative 2.46%, 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 Nine Months Ended September 30, 2021 and 2020

Net loss attributable to shareholders for the Current Period was $86.7 million, or $6.61 per basic share, on operating revenues of $108.6 million, compared to net loss attributable to shareholders for the Comparable Period of $231.8 million, or $17.68 per basic share, on operating revenues of $108.4 million.

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

	Nine Months Ended September 30,						Change
	2021			2020			$			%
(unaudited, in thousands)
Revenues
Contract drilling services	$	92,362		$	95,539		$	(3,177	)		-3	%
Reimbursables and other		16,256			12,903			3,353			26	%
Total revenues		108,618			108,442			176			0	%
Operating costs and expenses
Operating costs		106,782			113,890			(7,108	)		-6	%
General and administrative		15,055			15,715			(660	)		-4	%
Depreciation		42,423			54,647			(12,224	)		-22	%
Loss on impairment		—			128,876			(128,876	)		-100	%
Total operating costs and expenses		164,260			313,128			(148,868	)		-48	%
Loss from operations		(55,642	)		(204,686	)		149,044			-73	%
Other (expense) income
Interest income		118			853			(735	)		-86	%
Interest expense and financing charges		(25,529	)		(25,531	)		2			0	%
Other, net		(1,901	)		2,321			(4,222	)		-182	%
Total other expense		(27,312	)		(22,357	)		(4,955	)		22	%
Loss before income taxes		(82,954	)		(227,043	)		144,089			-63	%
Income tax provision		3,763			4,752			(989	)		-21	%
Net loss		(86,717	)		(231,795	)		145,078			-63	%
Net income (loss) attributable to noncontrolling interests		(41	)		16			(57	)		-356	%
Net loss attributable to shareholders	$	(86,676	)	$	(231,811	)	$	145,135			-63	%

Revenue: Total revenue increased $0.2 million due primarily to management of the Aquadrill rigs in the Current Period.

Contract drilling revenue decreased 3% 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 six 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; (ii) another drilling contract expired in the second quarter of 2020 in accordance with its terms and (iii) lower utilization on the Soehanah jackup rig in the Current Period as compared to the Comparable Period. These decreases were offset by higher utilization of the Topaz Driller and contract amendments on the Emerald Driller which resulted in higher dayrates during the Current Period as compared to the Comparable Period.

Reimbursables and other revenue for the Current Period increased $3.4 million as compared to the Comparable Period primarily as a result of reimbursables and other revenue derived from the management of the Aquadrill rigs (which we began managing during the first quarter of 2021), and higher reimbursable revenue on the Emerald Driller and Topaz Driller in the Current Period as compared to the Comparable Period. These increases were offset by decreased reimbursable revenue on the Tungsten Explorer as a result of lower utilization in the Current Period as compared to the Comparable Period.

Operating costs: Operating costs for the Current Period decreased 6% as compared to the Comparable Period. The decrease in operating costs was primarily the result of (i) lower costs incurred on warm stacked rigs and the sale of the Titanium Explorer on March 10, 2021 and (ii) 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 implemented during 2020 to reflect the lower levels of operating activity in the Comparable Period. General and administrative expenses for the Current Period and for the Comparable Period include approximately $0.3 million and $0.9 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 $11.3 million decrease in depreciation expense on the Titanium Explorer, which was classified as held for sale as of December 31, 2020 and subsequently sold on March 10, 2021.

Loss on impairment: During the Comparable Period, we evaluated our deepwater drilling rigs that had indicators of impairment and determined that the carrying value of our longer-term warm stacked drillship, the Titanium Explorer, was impaired. As a result, we recognized a non-cash loss on impairment of $128.9 million during the Comparable Period.

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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 and financing charges includes non-cash deferred financing costs totaling approximately $1.2 million for each of the Current Period and the Comparable Period.

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 $1.9 million was included in “Other, net”, for the Current Period. Net foreign currency exchange for the Comparable Period was immaterial.

Income tax provision: Our annualized effective tax rate for the Current Period is negative 8.01% 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 2.46% 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 extended into 2021 and could extend into 2022 and beyond, depending on, among other factors, how long COVID-19 remains a significant public health crisis and global economic activity remains challenged. 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 experienced, and could experience further, delays in the collection of certain accounts receivables due to logistical obstacles resulting from the COVID-19 pandemic, such as office closures, 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 , territorial entry restrictions and mandates, could impact our ability to operate in locations where such restrictions and requirements are in place, including those locations where we maintain significant operations and derive material revenue. During these uncertain times, we have sought, and continue to seek, measures to reduce our operating costs and preserve cash. We could implement further cost reduction measures (in addition to those previously put in place in 2020 and maintained through the Current Period) and alter our general financial strategy in the near- and long-term.

As of September 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 September 30, 2021, we had working capital of approximately $149.0 million, including approximately $105.5 million of cash available for general corporate purposes. Scheduled debt service consists of interest payments through September 30, 2022 of approximately $32.4 million. We anticipate capital expenditures through September 30, 2022 to be between approximately $18.2 million and $22.3 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 September 30, 2022 for special periodic surveys, major repair and maintenance expenditures and equipment recertifications to be between approximately $37.1 million and $45.3 million primarily as a result of anticipated maintenance that will need to be completed prior to commencement of upcoming contracts. As of September 30, 2021, we had $41.2 million available for the issuance of letters of credit under our cash collateralized letter of credit facility.

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

		Nine Months Ended September 30,
(unaudited, in thousands)		2021			2020
Cash flows (used in) provided by:
	Operating activities	$	(44,479	)	$	(61,076	)
	Investing activities		10,325			(2,634	)
	Financing activities		—			—

Changes in cash flows from operating activities are driven by changes in net loss during the relevant periods (see the discussion of changes in net loss above in “Results of Operations” of this Part I, Item 2) and includes $15.0 million in the Comparable Period paid in accordance with a settlement agreement entered into with Vantage Drilling Company, the Company's former parent company.

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

30

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 September 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 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 September 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 September 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

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4.1	First Lien Indenture, dated as of November 30, 2018, by and between Vantage Drilling International, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and first lien collateral agent		8-K	333-159299-15	4.1	12/04/18
4.2	First Supplemental Indenture by and between Vantage Drilling International, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and first lien collateral agent, dated January 24, 2019		10-K	333-159299-15	4.4	03/10/2020
4.3	Second Supplemental Indenture by and between Vantage Drilling International, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and first lien collateral agent, dated February 13, 2019		10-K	333-159299-15	4.5	03/10/2020
4.4	Shareholders Agreement dated as of February 10, 2016, by and among Offshore Group Investment Limited and the Shareholders (as defined therein)		8-K	333-159299-15	10.1	02/17/16
4.5	Amendment No. 1 to the Shareholders Agreement, dated as of February 10, 2016, by and among Offshore Group Investment Limited and the Shareholders (as defined therein)		8-K	333-159299-15	10.1	03/08/19
4.6	Registration Rights Agreement, dated as of February 10, 2016, by and among Offshore Group Investment Limited and each of the Holders (as defined therein) party thereto		8-K	333-159299-15	10.2	02/17/16
4.7	Amendment No. 1 to the Registration Rights Agreement, dated as of May 9, 2016, by and among Vantage Drilling International (f/k/a Offshore Group Investment Limited) and each of the Holders party thereto		10-Q	333-159299-15	10.3	5/13/16
4.8	Registration Rights Agreement among Vantage Drilling International, Vantage Drilling Company and the joint official liquidators of Vantage Drilling Company, dated as of April 26, 2017		10-K/A	333-212081	10.1	05/01/17
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		10-Q	333-159299-15	10.2	08/12/21
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

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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
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.

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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: November 9, 2021	By:	/s/ DOUGLAS E. STEWART
		Douglas E. Stewart
		Chief Financial Officer, General Counsel and Corporate Secretary
		(Principal Financial Officer)

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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.

November 9, 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.

November 9, 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 September 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.

November 9, 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 September 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.

November 9, 2021	/s/ DOUGLAS E. STEWART
	Douglas E. Stewart
	Chief Financial Officer, General Counsel and Corporate Secretary

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Nov. 02, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
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	Sep. 30, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 105,468	$ 141,945
Restricted cash	5,731	7,996
Trade receivables, net of allowance for doubtful accounts of $5.0 million, respectively	36,168	24,717
Materials and supplies	51,550	49,861
Prepaid expenses and other current assets	18,009	29,151
Total current assets	216,926	253,670
Property and equipment
Property and equipment	794,037	794,944
Accumulated depreciation	(316,916)	(278,562)
Property and equipment, net	477,121	516,382
Operating lease ROU assets	2,674	3,997
Other assets	22,088	12,126
Total assets	718,809	786,175
Current liabilities
Accounts payable	29,776	25,466
Other current liabilities	38,126	24,734
Total current liabilities	67,902	50,200
Long-term debt, net of discount and financing costs of $3,552 and $4,781, respectively	346,448	345,219
Other long-term liabilities	15,104	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	633,817	634,181
Accumulated deficit	(346,331)	(259,655)
Controlling interest shareholders' equity	287,499	374,539
Noncontrolling interests	1,856	1,206
Total equity	289,355	375,745
Total liabilities and shareholders' equity	$ 718,809	$ 786,175

XML

Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 5,000	$ 5,000
Long-term debt, discount and financing costs	$ 3,552	$ 4,781
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		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenue
Total revenue	$ 52,851	$ 20,211	$ 108,618	$ 108,442
Operating costs and expenses
Operating costs	45,369	27,231	106,782	113,890
General and administrative	4,593	3,829	15,055	15,715
Depreciation	14,137	18,230	42,423	54,647
Loss on impairment	0	128,876	0	128,876
Total operating costs and expenses	64,099	178,166	164,260	313,128
Loss from operations	(11,248)	(157,955)	(55,642)	(204,686)
Other (expense) income
Interest income	8	41	118	853
Interest expense and other financing charges	(8,508)	(8,510)	(25,529)	(25,531)
Other, net	(1,108)	(46)	(1,901)	2,321
Total other expense	(9,608)	(8,515)	(27,312)	(22,357)
Loss before income taxes	(20,856)	(166,470)	(82,954)	(227,043)
Income tax provision	881	2,855	3,763	4,752
Net loss	(21,737)	(169,325)	(86,717)	(231,795)
Net (loss) income attributable to noncontrolling interests	(10)	2	(41)	16
Net loss attributable to shareholders	$ (21,727)	$ (169,327)	$ (86,676)	$ (231,811)
Loss per share
Basic and Diluted	$ (1.66)	$ (12.91)	$ (6.61)	$ (17.68)
Contract Drilling Services
Revenue
Total revenue	$ 42,982	$ 18,069	$ 92,362	$ 95,539
Reimbursables and Other
Revenue
Total revenue	$ 9,869	$ 2,142	$ 16,256	$ 12,903

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	(231,795)
Ending Balance at Sep. 30, 2020	420,450	$ 13	633,924	(214,747)	1,260
Ending Balance (in shares) at Sep. 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
Share-based compensation	330		330
Net (loss) income	(169,325)			(169,327)	2
Ending Balance at Sep. 30, 2020	420,450	$ 13	633,924	(214,747)	1,260
Ending Balance (in shares) at Sep. 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	$ (86,717)
Ending Balance at Sep. 30, 2021	$ 289,355	$ 13	633,817	(346,331)	1,856
Ending Balance (in shares) at Sep. 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		13,115,000
Share-based compensation	29		29
Share-based compensation - dividend equivalents	30		30
Contributions from holders of noncontrolling interests (see Note 10)	691				691
Net (loss) income	(21,737)			(21,727)	(10)
Ending Balance at Sep. 30, 2021	$ 289,355	$ 13	$ 633,817	$ (346,331)	$ 1,856
Ending Balance (in shares) at Sep. 30, 2021	13,115,026	13,115,000

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (21,737)	$ (35,997)	$ (169,325)	$ (30,570)	$ (86,717)	$ (231,795)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense	14,137		18,230		42,423	54,647
Amortization of debt financing costs					1,229	1,229
Share-based compensation expense					366	1,358
Deferred income tax (benefit) expense					357	(36)
Loss (gain) on disposal of assets			100		(2,710)	52
Gain on settlement of restructuring agreement					0	(2,278)
Loss on impairment	0		128,876		0	128,876
Changes in operating assets and liabilities:
Trade receivables, net					(11,451)	7,394
Materials and Supplies					(2,084)	(1,924)
Prepaid expenses and other current assets					762	483
Other assets					(4,207)	4,250
Accounts payable					4,310	(20,734)
Other current liabilities and other long-term liabilities					13,243	(2,598)
Net cash used in operating activities					(44,479)	(61,076)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment					(3,232)	(2,634)
Net proceeds from sale of Titanium Explorer					13,557	0
Net cash provided by (used in) investing activities					10,325	(2,634)
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					(34,154)	(63,710)
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	$ 120,333		$ 179,234		120,333	179,234	$ 154,487
Cash paid for:
Interest					16,197	16,201
Income taxes (net of refunds)					2,350	6,918
Non-cash investing and financing transactions:
Reallocation of Soehanah jack up rig acquisition value from equipment to materials and supplies						$ 1,019

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Organization and Recent Events

9 Months Ended

Sep. 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 global spread of COVID-19, including its highly contagious variants and sub-lineages, continues to pose significant risks and challenges worldwide, and has caused and continues to cause widespread illness and significant loss of life, leading governments across the world to impose and re-impose severely stringent and extensive limitations on movement and human interaction, with certain countries, including those where we maintain significant operations and derive material revenue, 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.

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

The markets have generally exhibited a strong recovery in global oil prices for the first nine months 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.

In the fourth quarter 2021, one of our subsidiaries and a subsidiary of Aquadrill have reached an agreement to provide the West Capella, a 6th generation drillship outfitted with a managed pressure drilling system, for a two well contract plus two priced optional wells for operations in Indonesia. The drilling campaign is expected to commence in the first quarter of 2022, following the completion of the West Capella's current contract after the rig transitions to Vantage management and relocates to Indonesia. Vantage will earn its fees pursuant to its management and marketing agreements with Aquadrill.

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 Sheets. 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 (the “New ONGC Contract”) from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer concluded its prior three-year contract with ONGC in August 2021 and after being briefly out-of-service, is expected to commence the New ONGC Contract during the fourth quarter of 2021.

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Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 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 September 30, 2021 and for the three and nine months ended September 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. Our 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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	3,869	$	7,072
Non-current assets		87		84
Current liabilities		117		3,979
Non-current liabilities		79		741
Net carrying amount	$	3,760	$	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 our Consolidated Balance Sheets 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 nine months ended September 30, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three and nine months ended September 30, 2021, the gain/loss related to the sale or retirement of assets was immaterial. In the three and nine months ended September 30, 2020, we recognized a net loss of approximately $0.1 million related to the sale or retirement of assets.

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 September 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 September 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 September 30,				Nine Months Ended September 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 September 30,				Nine Months Ended September 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 nine months ended September 30, 2021, we recognized a net loss of approximately $1.1 million and $1.9 million, respectively, related to currency exchange rates. The foreign exchange gain/loss for the three and nine months ended September 30, 2020 related to currency exchange rates was immaterial.

Fair Value of Financial Instruments: The fair value of our short-term financial assets and liabilities approximates the carrying amounts represented in our Consolidated Balance Sheets principally due to the short-term nature or floating rate nature of these instruments. As of September 30, 2021, the fair value of the 9.25% First Lien Notes was approximately $319.7 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

9 Months Ended

Sep. 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 September 30, 2021								Three Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	32,596	$	5,307	$	690	$	38,593	$	10,220	$	6,239	$	—	$	16,459
Amortized revenue		5,079		—		—		5,079		1,022		588		—		1,610
Reimbursable revenue		4,905		577		3,697		9,179		1,817		325		—		2,142
Total revenue	$	42,580	$	5,884	$	4,387	$	52,851	$	13,059	$	7,152	$	—	$	20,211
	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	58,967	$	23,102	$	1,285	$	83,354	$	48,928	$	41,017	$	798	$	90,743
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		10,293		—		—		10,293		1,889		3,705		—		5,594
Reimbursable revenue		9,627		909		4,435		14,971		5,991		5,221		417		11,629
Total revenue	$	78,887	$	24,011	$	5,720	$	108,618	$	57,284	$	49,943	$	1,215	$	108,442

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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	201	$	2,905
Noncurrent contract cost assets		3,015		—
Current contract revenue assets		2,463		—
Current contract revenue liabilities		10,590		5,100

Significant changes in contract cost assets and contract revenue liabilities during the nine months ended September 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		6,542			2,463		16,010
Decrease due to recognition of revenue		(6,231	)		—		(10,520	)
Balance as of September 30, 2021 (1)	$	3,216		$	2,463	$	10,590

(1)We expect to recognize contract revenues of approximately $6.8 million during the remaining three months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of September 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

9 Months Ended

Sep. 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 Sheets. 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 September 30,						Nine Months Ended September 30,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020			2021			2020
Operating lease cost(1)	Operating costs	$	408		$	850		$	2,023		$	2,647
Operating lease cost(1)	General and administrative		152			152			455			455
Sublease income	Operating costs		(121	)		(121	)		(363	)		(363	)
Sublease income	General and administrative		(62	)		(62	)		(186	)		(186	)
Total operating lease cost		$	377		$	819		$	1,929		$	2,553

(1) Short-term lease costs were approximately $0.1 million and $0.3 million during the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.4 million during the three and nine months ended September 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

(unaudited, in thousands)	Classification in the Consolidated Balance Sheets	September 30, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	2,674	$	3,997
Total leased assets		$	2,674	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,751	$	2,038
Noncurrent operating	Other long-term liabilities		1,209		2,371
Total lease liabilities		$	2,960	$	4,409

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

(unaudited, in thousands)	Operating Leases
Remaining three months of 2021	$	533
2022		1,714
2023		949
2024		—
2025		—
Total future lease payments	$	3,196
Less imputed interest		(236	)
Present value of lease obligations	$	2,960

As of September 30, 2021, the weighted average discount rate and the weighted average remaining lease term for operating leases was 9.25% and 1.75 years, respectively. ROU assets and lease liabilities recorded for leases commencing during the three months ended September 30, 2021 was immaterial.

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 nine months ended September 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

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

5. Debt

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
9.25% First Lien Notes, net of financing costs of $3,552 and $4,781, respectively	$	346,448	$	345,219
Less current maturities of long-term debt		—		—
Long-term debt, net	$	346,448	$	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 $8.8 million in letters of credit under this facility as of September 30, 2021.

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Shareholders' Equity

9 Months Ended

Sep. 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 September 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 nine months ended September 30, 2021 and 2020. During the nine months ended September 30, 2021, 18,224 of previously-granted TBGs vested.

Both the TBGs and PBGs are classified as equity awards. For the nine months ended September 30, 2021 and 2020, we recognized share-based compensation expense related to the TBGs of approximately $0.4 million and $1.4 million, respectively. As of September 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, $8.7 million has been recorded in “Other long-term liabilities” in our Consolidated Balance Sheets at September 30, 2021 to be paid upon settlement of the TBGs.

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Income Taxes

9 Months Ended

Sep. 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 September 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 things, expand and extend the refundable employee retention tax credits previously made available under the CARES Act. As of September 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

9 Months Ended

Sep. 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 $19.6 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 $78.3 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 $78.3 million.

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 and 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 has defended, and intends to continue to vigorously defend against the allegations made in the Improbity Action and oppose and defend against any attempts to seize the Company's assets. 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 nine months ended September 30, 2020.

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Supplemental Financial Information

9 Months Ended

Sep. 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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable	$	6,297	$	6,797
Assets held for sale (1)		—		10,113
Other receivables		539		1,517
Income tax receivable		1,523		826
Prepaid insurance		748		386
Current deferred contract costs		201		2,905
Current contract asset		2,463		—
Other		6,238		6,607
	$	18,009	$	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:

	September 30, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	773,300		$	774,813
Assets under construction		1,744			561
Office and technology equipment		18,405			18,405
Leasehold improvements		588			1,165
		794,037			794,944
Accumulated depreciation		(316,916	)		(278,562	)
Property and equipment, net	$	477,121		$	516,382

Other Assets

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	9,134	$	4,546
Deferred certification costs		5,531		4,535
Noncurrent deferred contract costs		3,015		—
Deferred income taxes		1,768		1,923
Other noncurrent assets		2,640		1,122
	$	22,088	$	12,126

Other Current Liabilities

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	12,233	$	4,139
Compensation (1)		6,331		7,128
Income taxes payable		6,168		2,951
Current deferred revenue		10,590		5,100
Current portion of operating lease liabilities		1,751		2,038
Other		1,053		3,378
	$	38,126	$	24,734

(1) Includes $1.2 million as of September 30, 2021 and $2.1 million as of December 31, 2020 related to cash awards granted to certain key employees of the Company pursuant to underlying award agreements and issued under the 2016 Amended MIP.

Other Long-term Liabilities

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	1,171	$	970
2016 MIP - Dividend Equivalents (1)		8,735		8,006
Noncurrent operating lease liabilities		1,209		2,371
Other non-current liabilities		3,989		3,664
	$	15,104	$	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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Cash and cash equivalents	$	105,468	$	141,945
Restricted cash		5,731		7,996
Restricted cash included within Other Assets		9,134		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	120,333	$	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 in the approximate amount of $691,000 in 2019 to ADVantage in excess of the issued capital of the joint venture, with the understanding that such amounts were to be considered shareholder loans. The excess cash contribution and accrued interest were included in “Other current liabilities” on the Consolidated Balance Sheets. On July 29, 2021, the excess cash contribution to ADVantage was reflected on the commercial register of ADVantage in Egypt. As such, the amount was converted to capital contributions and reclassified from “Other current liabilities” to “Additional paid-in capital” on the Consolidated Balance Sheets.

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 September 30, 2021, accounts payable to ADES totaled approximately $0.8 million, included in “Accounts payable,” on the Consolidated Balance Sheets. There were no outstanding accounts receivable from ADES as of September 30, 2021.

One of our shareholders that owns a significant portion of our Ordinary shares also owns an interest in Aquadrill.

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

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Business Segment and Significant Customer Information

9 Months Ended

Sep. 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 nine months ended September 30, 2021, respectively, and less than 1% of the total revenue for the three and nine months ended September 30, 2020, respectively.

For the three and nine months ended September 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. Six customers accounted for approximately 28%, 16%, 14%, 11%, 11% and 11% of consolidated revenue for the three months ended September 30, 2021 and three customers accounted for approximately 29%, 22% and 12% of consolidated revenue for the nine months ended September 30, 2021. Three customers accounted for approximately 34%, 31% and 29% of consolidated revenue for the three months ended September 30, 2020, and five customers accounted for approximately 24%, 16%, 14%, 12% and 12% of the consolidated revenue for the nine months ended September 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
(unaudited, in thousands)
Montenegro	$	14,887	$	—	$	31,193	$	—
India		5,884		6,933		24,036		25,817
Qatar		7,932		5,805		22,826		14,780
Equatorial Guinea		8,474		—		—		—
Indonesia		5,591		6,294		—		14,476
Congo		—		—		—		13,272
Malaysia		5,692		—		—		—
Lebanon		—		—		—		17,347
Other countries (1)		4,391		1,179		30,563		22,750
Total revenues	$	52,851	$	20,211	$	108,618	$	108,442

(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”):

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Mediterranean	$	177,595	$	225,484
India		100,365		111,485
Indonesia		64,990		69,434
Other countries (1)		134,171		109,979
Total property and equipment	$	477,121	$	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)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation: The accompanying interim consolidated financial information as of September 30, 2021 and for the three and nine months ended September 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. Our 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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	3,869	$	7,072
Non-current assets		87		84
Current liabilities		117		3,979
Non-current liabilities		79		741
Net carrying amount	$	3,760	$	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 our Consolidated Balance Sheets 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 nine months ended September 30, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three and nine months ended September 30, 2021, the gain/loss related to the sale or retirement of assets was immaterial. In the three and nine months ended September 30, 2020, we recognized a net loss of approximately $0.1 million related to the sale or retirement of assets.

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 September 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 September 30, 2021								Three Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	32,596	$	5,307	$	690	$	38,593	$	10,220	$	6,239	$	—	$	16,459
Amortized revenue		5,079		—		—		5,079		1,022		588		—		1,610
Reimbursable revenue		4,905		577		3,697		9,179		1,817		325		—		2,142
Total revenue	$	42,580	$	5,884	$	4,387	$	52,851	$	13,059	$	7,152	$	—	$	20,211
	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	58,967	$	23,102	$	1,285	$	83,354	$	48,928	$	41,017	$	798	$	90,743
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		10,293		—		—		10,293		1,889		3,705		—		5,594
Reimbursable revenue		9,627		909		4,435		14,971		5,991		5,221		417		11,629
Total revenue	$	78,887	$	24,011	$	5,720	$	108,618	$	57,284	$	49,943	$	1,215	$	108,442

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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	201	$	2,905
Noncurrent contract cost assets		3,015		—
Current contract revenue assets		2,463		—
Current contract revenue liabilities		10,590		5,100

Significant changes in contract cost assets and contract revenue liabilities during the nine months ended September 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		6,542			2,463		16,010
Decrease due to recognition of revenue		(6,231	)		—		(10,520	)
Balance as of September 30, 2021 (1)	$	3,216		$	2,463	$	10,590

(1)We expect to recognize contract revenues of approximately $6.8 million during the remaining three months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of September 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 September 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 September 30,				Nine Months Ended September 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 September 30,				Nine Months Ended September 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 nine months ended September 30, 2021, we recognized a net loss of approximately $1.1 million and $1.9 million, respectively, related to currency exchange rates. The foreign exchange gain/loss for the three and nine months ended September 30, 2020 related to currency exchange rates was immaterial.

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 our Consolidated Balance Sheets principally due to the short-term nature or floating rate nature of these instruments. As of September 30, 2021, the fair value of the 9.25% First Lien Notes was approximately $319.7 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)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Schedule of Carrying Amounts of Assets and Liabilities of VIE

The carrying amount associated with ADVantage was as follows:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	3,869	$	7,072
Non-current assets		87		84
Current liabilities		117		3,979
Non-current liabilities		79		741
Net carrying amount	$	3,760	$	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 September 30,				Nine Months Ended September 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 September 30,				Nine Months Ended September 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)

9 Months Ended

Sep. 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 September 30, 2021								Three Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	32,596	$	5,307	$	690	$	38,593	$	10,220	$	6,239	$	—	$	16,459
Amortized revenue		5,079		—		—		5,079		1,022		588		—		1,610
Reimbursable revenue		4,905		577		3,697		9,179		1,817		325		—		2,142
Total revenue	$	42,580	$	5,884	$	4,387	$	52,851	$	13,059	$	7,152	$	—	$	20,211
	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	58,967	$	23,102	$	1,285	$	83,354	$	48,928	$	41,017	$	798	$	90,743
Charter lease revenue		—		—		—		—		476		—		—		476
Amortized revenue		10,293		—		—		10,293		1,889		3,705		—		5,594
Reimbursable revenue		9,627		909		4,435		14,971		5,991		5,221		417		11,629
Total revenue	$	78,887	$	24,011	$	5,720	$	108,618	$	57,284	$	49,943	$	1,215	$	108,442

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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	201	$	2,905
Noncurrent contract cost assets		3,015		—
Current contract revenue assets		2,463		—
Current contract revenue liabilities		10,590		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 nine months ended September 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		6,542			2,463		16,010
Decrease due to recognition of revenue		(6,231	)		—		(10,520	)
Balance as of September 30, 2021 (1)	$	3,216		$	2,463	$	10,590

(1)We expect to recognize contract revenues of approximately $6.8 million during the remaining three months of 2021 and $3.8 million thereafter related to unsatisfied performance obligations existing as of September 30, 2021.

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Leases (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Components of Lease Expense

The components of lease expense were as follows:

		Three Months Ended September 30,						Nine Months Ended September 30,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020			2021			2020
Operating lease cost(1)	Operating costs	$	408		$	850		$	2,023		$	2,647
Operating lease cost(1)	General and administrative		152			152			455			455
Sublease income	Operating costs		(121	)		(121	)		(363	)		(363	)
Sublease income	General and administrative		(62	)		(62	)		(186	)		(186	)
Total operating lease cost		$	377		$	819		$	1,929		$	2,553

(1) Short-term lease costs were approximately $0.1 million and $0.3 million during the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.4 million during the three and nine months ended September 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 Sheets	September 30, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	2,674	$	3,997
Total leased assets		$	2,674	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,751	$	2,038
Noncurrent operating	Other long-term liabilities		1,209		2,371
Total lease liabilities		$	2,960	$	4,409

Schedule of Maturities of Operating Lease Liabilities

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

(unaudited, in thousands)	Operating Leases
Remaining three months of 2021	$	533
2022		1,714
2023		949
2024		—
2025		—
Total future lease payments	$	3,196
Less imputed interest		(236	)
Present value of lease obligations	$	2,960

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Debt (Tables)

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Long-term Debt

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
9.25% First Lien Notes, net of financing costs of $3,552 and $4,781, respectively	$	346,448	$	345,219
Less current maturities of long-term debt		—		—
Long-term debt, net	$	346,448	$	345,219

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Supplemental Financial Information (Tables)

9 Months Ended

Sep. 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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable	$	6,297	$	6,797
Assets held for sale (1)		—		10,113
Other receivables		539		1,517
Income tax receivable		1,523		826
Prepaid insurance		748		386
Current deferred contract costs		201		2,905
Current contract asset		2,463		—
Other		6,238		6,607
	$	18,009	$	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:

	September 30, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	773,300		$	774,813
Assets under construction		1,744			561
Office and technology equipment		18,405			18,405
Leasehold improvements		588			1,165
		794,037			794,944
Accumulated depreciation		(316,916	)		(278,562	)
Property and equipment, net	$	477,121		$	516,382

Other Assets

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	9,134	$	4,546
Deferred certification costs		5,531		4,535
Noncurrent deferred contract costs		3,015		—
Deferred income taxes		1,768		1,923
Other noncurrent assets		2,640		1,122
	$	22,088	$	12,126

Other Current Liabilities

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	12,233	$	4,139
Compensation (1)		6,331		7,128
Income taxes payable		6,168		2,951
Current deferred revenue		10,590		5,100
Current portion of operating lease liabilities		1,751		2,038
Other		1,053		3,378
	$	38,126	$	24,734

(1) Includes $1.2 million as of September 30, 2021 and $2.1 million as of December 31, 2020 related to cash awards granted to certain key employees of the Company pursuant to underlying award agreements and issued under the 2016 Amended MIP.

Other Long-term Liabilities

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

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	1,171	$	970
2016 MIP - Dividend Equivalents (1)		8,735		8,006
Noncurrent operating lease liabilities		1,209		2,371
Other non-current liabilities		3,989		3,664
	$	15,104	$	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:

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Cash and cash equivalents	$	105,468	$	141,945
Restricted cash		5,731		7,996
Restricted cash included within Other Assets		9,134		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	120,333	$	154,487

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Business Segment and Significant Customer Information (Tables)

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
(unaudited, in thousands)
Montenegro	$	14,887	$	—	$	31,193	$	—
India		5,884		6,933		24,036		25,817
Qatar		7,932		5,805		22,826		14,780
Equatorial Guinea		8,474		—		—		—
Indonesia		5,591		6,294		—		14,476
Congo		—		—		—		13,272
Malaysia		5,692		—		—		—
Lebanon		—		—		—		17,347
Other countries (1)		4,391		1,179		30,563		22,750
Total revenues	$	52,851	$	20,211	$	108,618	$	108,442

(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”):

	September 30, 2021		December 31, 2020
(unaudited, in thousands)
Mediterranean	$	177,595	$	225,484
India		100,365		111,485
Indonesia		64,990		69,434
Other countries (1)		134,171		109,979
Total property and equipment	$	477,121	$	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.

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Organization and Recent Events - Additional Information (Detail) $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Dec. 31, 2021 Well	Sep. 30, 2021 USD ($) Deepwater	Sep. 30, 2020 USD ($)	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
Aquadrill LLC | Subsidiary Agreement | Drillships | Forecast
Organization And Recent Events [Line Items]
Number of well contracts | Well	2
Number of priced optional wells | Well	2
Drilling campaign expected commencement, description	The drilling campaign is expected to commence in the first quarter of 2022, following the completion of the West Capella's current contract after the rig transitions to Vantage management and relocates to Indonesia.

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Basis of Presentation and Significant Accounting Policies - Schedule of Carrying Amounts of Assets and Liabilities of VIE (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Variable Interest Entity [Line Items]
Current assets	$ 216,926	$ 253,670
Current liabilities	67,902	50,200
ADVantage
Variable Interest Entity [Line Items]
Current assets	3,869	7,072
Non-current assets	87	84
Current liabilities	117	3,979
Non-current liabilities	79	741
Net carrying amount	$ 3,760	$ 2,436

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Basis of Presentation and Significant Accounting Policies - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Basis Of Presentation And Significant Accounting Policies [Line Items]
Net gain (loss) on sale or retirement of assets		$ (100,000)	$ 2,710,000	$ (52,000)
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)	(1,100,000)		$ (1,900,000)
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	$ 319,700,000		$ 319,700,000
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

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Basis of Presentation and Significant Accounting Policies - Schedule of Reconciliation of Number of Shares Used For Basic and Diluted EPS Computation (Detail) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Basis Of Presentation And Significant Accounting Policies [Line Items]
Weighted average Ordinary Shares outstanding for basic EPS	13,115	13,115	13,115	13,115
Adjusted weighted average Ordinary Shares outstanding for diluted EPS	13,115	13,115	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

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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		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 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

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Revenue from Contracts with Customers - Additional Information (Detail)	9 Months Ended
	Sep. 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

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Revenue from Contracts with Customers - Schedule of Disaggregated by Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation Of Revenue [Line Items]
Total revenue	$ 52,851	$ 20,211	$ 108,618	$ 108,442
Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	42,580	13,059	78,887	57,284
Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	5,884	7,152	24,011	49,943
Management
Disaggregation Of Revenue [Line Items]
Total revenue	4,387	0	5,720	1,215
Dayrate Revenue
Disaggregation Of Revenue [Line Items]
Total revenue	38,593	16,459	83,354	90,743
Dayrate Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	32,596	10,220	58,967	48,928
Dayrate Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	5,307	6,239	23,102	41,017
Dayrate Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue	690	0	1,285	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	5,079	1,610	10,293	5,594
Amortized Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	5,079	1,022	10,293	1,889
Amortized Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	0	588	0	3,705
Amortized Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue	0	0	0	0
Reimbursable Revenue
Disaggregation Of Revenue [Line Items]
Total revenue	9,179	2,142	14,971	11,629
Reimbursable Revenue | Jackups
Disaggregation Of Revenue [Line Items]
Total revenue	4,905	1,817	9,627	5,991
Reimbursable Revenue | Deepwater
Disaggregation Of Revenue [Line Items]
Total revenue	577	325	909	5,221
Reimbursable Revenue | Management
Disaggregation Of Revenue [Line Items]
Total revenue	$ 3,697	$ 0	$ 4,435	$ 417

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Revenue from Contracts with Customers - Schedule of Contract Cost Assets and Contract Revenue Liabilities from Contracts with Customers (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Revenue from Contract with Customer [Abstract]
Current contract cost assets	$ 201	$ 2,905
Noncurrent contract cost assets	3,015	0
Current contract revenue assets	2,463	0
Current contract revenue liabilities	$ 10,590	$ 5,100

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Revenue from Contracts with Customers - Schedule of Significant Changes in Contract Cost Assets and Contract Revenue Liabilities (Detail) $ in Thousands	9 Months Ended
	Sep. 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	6,542
Decrease due to recognition of revenue, contract cost asset assets	(6,231)
Ending balance, contract cost assets	3,216
Beginning balance, contract revenue assets	0
Increase (decrease) due to contractual changes, contract revenue assets	2,463
Decrease due to recognition of revenue, contract revenue assets	0
Ending balance, contract revenue assets	2,463
Beginning balance, contract revenues	5,100
Increase (decrease) due to contractual changes, contract revenues	16,010
Decrease due to recognition of revenue, contract revenues	(10,520)
Ending balance, contract revenues	$ 10,590

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Revenue from Contracts with Customers - Schedule of Significant Changes in Contract Cost Assets and Contract Revenue Liabilities (Parenthetical) (Detail) $ in Millions	Sep. 30, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-10-01
Disaggregation Of Revenue [Line Items]
Contract revenues, remaining performance obligation	$ 6.8
Contract revenues, remaining performance obligation, expected timing of satisfaction, period	3 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

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Leases - Components of Lease Expense (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Lessee Lease Description [Line Items]
Total operating lease cost		$ 377	$ 819	$ 1,929	$ 2,553
Operating Costs
Lessee Lease Description [Line Items]
Total operating lease cost	[1]	408	850	2,023	2,647
Sublease income		(121)	(121)	(363)	(363)
General and Administrative
Lessee Lease Description [Line Items]
Total operating lease cost	[1]	152	152	455	455
Sublease income		$ (62)	$ (62)	$ (186)	$ (186)

[1] Short-term lease costs were approximately $0.1 million and $0.3 million during the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.4 million during the three and nine months ended September 30, 2020, respectively. Operating cash flows used for operating leases approximates lease expense.

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Leases - Components of Lease Expense (Parenthetical) (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Short term lease costs	$ 0.1	$ 0.1	$ 0.3	$ 0.4

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Leases - Schedule of Operating Leases Included in Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets:
Operating lease assets	$ 2,674	$ 3,997
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Operating lease assets	Operating lease assets
Liabilities:
Current operating	$ 1,751	$ 2,038
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities	Other current liabilities
Noncurrent operating	$ 1,209	$ 2,371
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Liabilities, Other than Long-term Debt, Noncurrent	Liabilities, Other than Long-term Debt, Noncurrent
Total lease liabilities	$ 2,960	$ 4,409

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Leases - Schedule of Maturities of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Leases [Abstract]
Remaining three months of 2021	$ 533
2022	1,714
2023	949
2024	0
2025	0
Total future lease payments	3,196
Less imputed interest	(236)
Present value of lease obligations	$ 2,960	$ 4,409

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Leases - Additional Information (Detail)	Sep. 30, 2021
Leases [Abstract]
Weighted average discount rate for operating leases	9.25%
Weighted average remaining lease term for operating leases	1 year 9 months

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Debt - Long-Term Debt (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Less current maturities of long-term debt	$ 0	$ 0
Long-term debt, net	346,448	345,219
9.25% First Lien Notes
Debt Instrument [Line Items]
Long-term debt	$ 346,448	$ 345,219

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Debt - Long-Term Debt (Parenthetical) (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
9.25% First Lien Notes
Debt Instrument [Line Items]
Debt financing cost	$ 3,552	$ 4,781

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Debt - 9.25% First Lien Notes - Additional Information (Detail) - 9.25% First Lien Notes - USD ($) $ in Millions	Nov. 30, 2018	Sep. 30, 2021
Debt Instrument [Line Items]
Issuance of debt	$ 350.0
Debt instrument, interest rate		9.25%
Letters of credit		$ 8.8
New Letter of Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	50.0
First Payment | Maximum
Debt Instrument [Line Items]
Repayments of debt	$ 50.0

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Shareholders' Equity - Additional Information (Detail) - USD ($)		9 Months Ended
	Dec. 04, 2019	Sep. 30, 2021	Sep. 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		$ 400,000	$ 1,400,000
Time-based Restricted Stock Unit | Special Cash Distribution
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividends cash		8,700,000
Performance-based Restricted Stock Unit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense		$ 0

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Income Taxes - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2021
Minimum
Income Tax Contingency [Line Items]
Open tax year	2011

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Commitments and Contingencies - Additional Information (Detail) R$ in Millions, $ in Millions						9 Months Ended
	Mar. 25, 2020 USD ($)	Mar. 04, 2020 USD ($)	Feb. 13, 2019 USD ($)	Apr. 27, 2018 BRL (R$) Defendant	Apr. 27, 2018 USD ($) Defendant	Sep. 30, 2021	Sep. 30, 2020 USD ($)
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	$ 19.6
Court authorization to seizure and freezing assets of defendants					$ 78.3
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 $78.3 million.
Brazil Improbity Action | United States
Loss Contingencies [Line Items]
Court authorization to seizure and freezing assets of defendants			$ 78.3
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

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Supplemental Financial Information - Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Prepaid Expense and Other Assets, Current [Abstract]
Sales tax receivable		$ 6,297	$ 6,797
Assets held for sale	[1]	0	10,113
Other receivables		539	1,517
Income tax receivable		1,523	826
Prepaid insurance		748	386
Current deferred contract costs		201	2,905
Current contract asset		2,463	0
Other		6,238	6,607
Prepaid expenses and other current assets		$ 18,009	$ 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.

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Supplemental Financial Information - Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Property Plant And Equipment [Line Items]
Property and equipment	$ 794,037	$ 794,944
Accumulated depreciation	(316,916)	(278,562)
Property and equipment, net	477,121	516,382
Drilling Equipment
Property Plant And Equipment [Line Items]
Property and equipment	773,300	774,813
Assets under Construction
Property Plant And Equipment [Line Items]
Property and equipment	1,744	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	$ 588	$ 1,165

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Supplemental Financial Information - Other Assets (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Other Assets, Noncurrent Disclosure [Abstract]
Noncurrent restricted cash	$ 9,134	$ 4,546
Deferred certification costs	5,531	4,535
Noncurrent deferred contract costs	3,015	0
Deferred income taxes	1,768	1,923
Other noncurrent assets	2,640	1,122
Total other assets	$ 22,088	$ 12,126

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Supplemental Financial Information - Other Current Liabilities (Detail) - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Other Liabilities Disclosure [Abstract]
Interest		$ 12,233	$ 4,139
Compensation	[1]	6,331	7,128
Income taxes payable		6,168	2,951
Current deferred revenue		10,590	5,100
Current portion of operating lease liabilities		1,751	2,038
Other		1,053	3,378
Other current liabilities		$ 38,126	$ 24,734

[1] Includes $1.2 million as of September 30, 2021 and $2.1 million as of December 31, 2020 related to cash awards granted to certain key employees of the Company pursuant to underlying award agreements and issued under the 2016 Amended MIP.

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Supplemental Financial Information - Other Current Liabilities (Parenthetical) (Detail) - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Other Current Liabilities [Line Items]
Compensation	[1]	$ 6,331	$ 7,128
Cash Awards To Certain Key Employees
Other Current Liabilities [Line Items]
Compensation		$ 1,200	$ 2,100

[1] Includes $1.2 million as of September 30, 2021 and $2.1 million as of December 31, 2020 related to cash awards granted to certain key employees of the Company pursuant to underlying award agreements and issued under the 2016 Amended MIP.

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Supplemental Financial Information - Other Long-term Liabilities (Detail) - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Liabilities, Noncurrent [Abstract]
Deferred income taxes		$ 1,171	$ 970
2016 MIP - Dividend Equivalents	[1]	8,735	8,006
Noncurrent operating lease liabilities		1,209	2,371
Other non-current liabilities		3,989	3,664
Other long-term liabilities		$ 15,104	$ 15,011

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

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Supplemental Financial Information - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents	$ 105,468	$ 141,945
Restricted cash	5,731	7,996
Restricted cash included within Other Assets	$ 9,134	$ 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	$ 120,333	$ 154,487

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Supplemental Financial Information - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2021
ADES
Supplemental Financial Information [Line Items]
Accounts receivable from related parties		$ 0
Accounts payable to related parties		$ 800,000
ADVantage | Shareholder Loan
Supplemental Financial Information [Line Items]
Cash contributions in excess of issued capital of joint venture	$ 691,000

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Business Segment and Significant Customer Information - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2021 Customer	Sep. 30, 2020 Customer	Sep. 30, 2021 Customer Segment	Sep. 30, 2020 Customer
Entity Wide Revenue Major Customer [Line Items]
Number of reportable segments | Segment			1
Number of customers accounted for revenues | Customer	6	3	3	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)	28.00%	34.00%	29.00%	24.00%
Customer Concentration Risk | Sales | Customer Two
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	16.00%	31.00%	22.00%	16.00%
Customer Concentration Risk | Sales | Customer Three
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	14.00%	29.00%	12.00%	14.00%
Customer Concentration Risk | Sales | Customer Four
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	11.00%			12.00%
Customer Concentration Risk | Sales | Customer Five
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	11.00%			12.00%
Customer Concentration Risk | Sales | Customer Six
Entity Wide Revenue Major Customer [Line Items]
Percentage of revenue (excluding reimbursable revenue)	11.00%

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Business Segment and Significant Customer Information - Summary of Revenue by Country (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Entity Wide Revenue Major Customer [Line Items]
Revenues		$ 52,851	$ 20,211	$ 108,618	$ 108,442
Montenegro
Entity Wide Revenue Major Customer [Line Items]
Revenues		14,887	0	31,193	0
India
Entity Wide Revenue Major Customer [Line Items]
Revenues		5,884	6,933	24,036	25,817
Qatar
Entity Wide Revenue Major Customer [Line Items]
Revenues		7,932	5,805	22,826	14,780
Equatorial Guinea
Entity Wide Revenue Major Customer [Line Items]
Revenues		8,474	0	0	0
Indonesia
Entity Wide Revenue Major Customer [Line Items]
Revenues		5,591	6,294	0	14,476
Congo
Entity Wide Revenue Major Customer [Line Items]
Revenues		0	0	0	13,272
Malaysia
Entity Wide Revenue Major Customer [Line Items]
Revenues		5,692	0	0	0
Lebanon
Entity Wide Revenue Major Customer [Line Items]
Revenues		0	0	0	17,347
Other countries
Entity Wide Revenue Major Customer [Line Items]
Revenues	[1]	$ 4,391	$ 1,179	$ 30,563	$ 22,750

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

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Business Segment and Significant Customer Information - Schedule of Property and Equipment, Net by Country (Detail) - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		$ 477,121	$ 516,382
Mediterranean
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		177,595	225,484
India
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		100,365	111,485
Indonesia
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment		64,990	69,434
Other countries
Revenues From External Customers And Long Lived Assets [Line Items]
Total property and equipment	[1]	$ 134,171	$ 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.