item 14 principal accounting fees services information required item filed amendment annual report form 10k filed ec later 120 days close fiscal year ended december 31 2015 part iv item 15item 14 principal accounting fees services information required item filed amendment annual report form 10k filed sec later 120 days close fiscal year ended december 31 2017 part iv item 15item 14 principal accounting fees services information required item filed amendment annual report form 10k filed sec later 120 days close fiscal year ended december 31 2018 part iv item 15item 14 principal accounting fees services consistent previous years accordance requirements sec information required item filed sec form 10ka within 120 days december 31 2020 part iv item 15item 14 principal accountant fees services information required item filed amendment annual report form 10k filed sec later 120 days close fiscal year ended december 31 2016 part iv item 15item 14 principal accounting fees services consistent previous years accordance requirements sec information required item filed sec form 10ka within 120 days december 31 2019 part iv item 15 item 7 management’s discussion analysis financial condition results operations following discussion intended assist understanding financial position december 31 2015 2014 results operations years ended december 31 2015 2014 following discussion read conjunction information contained “item 1 business” “item 1a risk factors” “item 8 financial statements supplementary data” elsewhere annual report form 10k overview international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers also provide construction supervision services drilling units owned others fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused primarily international markets following table sets forth certain information concerning offshore drilling fleet march 1 2016 1 drillships designed drill 12000 feet water platinum explorer titanium explorer tungsten explorer currently equipped drill 10000 feet water business outlook expectations future oil natural gas prices historically key driver demand services international energy agency estimates demand growth 2016 increase approximately 12 million barrels per day 13 represents deceleration growth 2015 17 million barrels per day 18 combination surplus production high inventories continues depress oil prices response significant decline oil prices exploration development companies significantly reducing capital expenditure budgets 2016 beyond worldwide exploration production spending cuts 2016 estimated 11 17 following estimated 23 reduction 2015 making largest twoyear decline history result dramatic capital expenditure reductions exploration development companies releasing rigs significantly reducing equipment orders believe oil production declines regions necessary stimulate significant recovery offshore drilling market accordingly anticipate industry experience depressed market conditions remainder 2016 2017 addition generally depressed market conditions 85 jackup rigs 19 deepwater rigs scheduled delivery shipyards remainder 2016 per industry sources anticipate rigs delivered excess supply rigs depressing markets operate offshore drilling contractors faced taking delivery newbuild drilling rigs without contracts resulting willingness significantly reduce dayrates get rigs working response oversupply drilling rigs number competitors removing older less efficient rigs fleets either cold stacking drilling rigs taking permanently service process takes time many drilling rigs still working customers contracts accordingly believe important element bringing supply drilling rigs back balance demand sufficient materially improve market conditions 2016 summary backlog coverage days contracted related revenue follows results operations four jackup rigs began operations initial contracts february 2009 august 2009 january 2010 march 2010 respectively first drillship platinum explorer commenced operations december 2010 second drillship titanium explorer commenced operations december 2012 third drillship tungsten explorer commenced operations september 2013 operating results contract drilling services dependent three primary metrics available days rig utilization dayrates following table sets forth selected operational information years indicated 1 available days total number rig calendar days period newbuild rigs included upon acceptance customer 2 utilization calculated percentage actual number revenue earning days divided available days period revenue earning day defined day rig earns dayrate commencement operations 3 average daily revenues based contract drilling revenues divided revenue earning days average daily revenue differ average contract dayrate due billing adjustments nonproductive time mobilization fees demobilization fees 2015 compared 2014 following table analysis operating results years ended december 31 2015 2014 revenue total revenue year ended december 31 2015 decreased 13 compared year ended december 31 2014 contract drilling revenue decreased 10 year ended december 31 2015 compared period 2014 decrease contract drilling revenue primarily due following approximately 589 million due reduced utilization jackups drillships b approximately 398 million due reduced dayrates jackup fleet partially offset approximately 182 million due increased effective dayrates drillships management fees reimbursable revenues decreased approximately 65 30 respectively primarily due decrease management business completed operations management contract two jackups mexico prior year jackup utilization year ended december 31 2015 decreased approximately 23 compared prior year due idle time contracts aquamarine driller deepwater utilization year ended december 31 2015 decreased approximately 2 compared prior year due primarily early termination titanium explorer contract customer september 2015 operating costs operating costs year ended december 31 2015 decreased 11 compared year ended december 31 2014 due primarily following approximately 156 million due reduced costs following early termination titanium explorer contract customer september 2015 b approximately 109 million due reduced costs aquamarine driller idle time contracts 2015 c approximately 102 million due reduced operations support costs resulting cost savings initiatives general administrative expenses general administrative expenses year ended december 31 2015 consistent year ended december 31 2014 increases legal professional fees 16 million primarily related financing restructuring activities offset decreases labor costs depreciation expense depreciation expense year ended december 31 2015 consistent year ended december 31 2014 interest expense financing charges interest expense financing charges year ended december 31 2015 decreased fiscal year 2014 primarily due lower debt outstanding suspension interest debt subsequent chapter 11 filing gain extinguishment debt year ended december 31 2015 repurchased open market discount face value 318 million prebankruptcy senior notes 75 million prebankruptcy term loan recognized gains 93 million 16 million respectively including writeoff deferred financing costs 564000 connection additional principal payment 420 million june 2015 prebankruptcy term loan recognized loss 14 million resulting writeoff deferred financing costs 855000 original debt issuance discount 599000 connection open market purchase 2 million prebankruptcy term loan december 2015 recognized gain 313000 year ended december 31 2014 repurchased open market discount face value 474 million 314 million two series prebankruptcy notes recognized gains 27 million 40 million respectively gains partially offset writeoff deferred financing costs 12 million reorganization items filing bankruptcy petition december 3 2015 incurred 22 million postpetition professional fees associated bankruptcy cases additionally incurred noncash charges 314 million 57 million writeoff unamortized debt issuance costs debt discounts respectively associated indebtedness expected allowed claims bankruptcy income tax expense revenue year ended december 31 2015 earned higher taxed jurisdictions ie deemed profit compared year ended december 31 2014 accordingly tax expense 2015 approximately year ended december 31 2014 net income attributable noncontrolling interests net income attributable noncontrolling interests year ended december 31 2015 includes 45 million income tax benefit related audit settlement liquidity capital resources december 31 2015 working capital approximately 2284 million including approximately 2034 million cash available general corporate purposes additionally posted 32 million cash collateral bid tenders performance bonds anticipate capital expenditures 2016 approximately 110 140 million sustaining capital expenditures fleet capital spares information technology scheduled principal debt maturities interest payments 2016 approximately 194 million expect fund capital expenditures debt related payments available working capital cash flow operations table includes summary cash flow information years ended december 31 2015 2014 changes cash flows operating activities year ended december 31 2015 driven changes net income see discussion changes net income “results operations” significant collections customers period changes cash flows used investing activities dependent upon level capital expenditures varies based timing projects cash used capital expenditures totaled 46 million 2015 compared 36 million 2014 changes cash flows financing activities year ended december 31 2015 primarily due higher borrowings revolving credit facility lower discretionary open market purchases prebankruptcy debt compared year ended december 31 2014 december 1 2015 vdc entered restructuring agreement majority secured creditors pursuant terms restructuring agreement company agreed pursue reorganization plan chapter 11 title 11 united states bankruptcy code vdc would commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note original principal amount 615 million december 3 2015 company 24 debtor subsidiaries including five debtor subsidiaries vdc guarantors company’s prebankruptcy secured debt filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 district court delaware confirmed company’s prepackaged reorganization plan company emerged bankruptcy effective february 10 2016 significant elements reorganization plan included second amended restated credit agreement company’s credit agreement amended “credit agreement” replace 320 million revolving letter credit commitment new 320 million revolving letter credit facility ii repay 150 million outstanding borrowings 70 million cash b issuance 1430 million initial term loans obligations credit agreement guaranteed substantially company’s subsidiaries subject limited exceptions secured first priority basis substantially company’s guarantors’ assets including ship mortgages vessels assignments related earnings insurance pledges capital stock guarantors case subject certain exceptionsthe maturity date term loans commitments established credit agreement december 31 2019 interest payable unpaid principal amount term loan credit agreement libor plus 65 libor floor 10 initial term loans currently bearing interest 75 fees payable outstanding face amount letters credit rate per annum equal 550 rate may increased time pursuant terms credit agreement credit agreement includes customary representations warranties mandatory prepayments affirmative negative covenants events default including covenants among things restrict granting liens incurrence indebtedness making investments capital expenditures sale conveyance assets including vessels transactions affiliates prepayments certain debt operation vessels credit agreement also requires company maintain certain levels available cash defined include unrestricted cash equivalents plus undrawn commitments 10 senior secured second lien notes company engaged rights offering 750 million new 10 senior secured second lien notes due 2020 “10 second lien notes” certain holders secured debt claims connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes raising 739 million deducting cash portion backstop premium 10 second lien notes issued par fully unconditionally guaranteed senior secured basis certain subsidiaries company 10 second lien notes mature december 31 2020 bear interest date issuance rate 10 per year interest outstanding 10 second lien notes payable semiannually arrears commencing june 30 2016 interest computed basis 360day year comprised twelve 30day months second lien indenture includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial reports ·112 stepup senior subordinated secured third lien convertible notes company issued 4344959 new ordinary shares company “new shares” 7500 million 112 stepup senior secured third lien convertible notes due december 31 2030 “convertible notes” certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes may traded together separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms third lien indenture 9560 issue date third lien indenture includes customary covenants restrict granting liens customary events default including among things failure issue securities upon conversion convertible notes ·interest third lien notes payable semiannually arrears commencing june 30 2016 payment kind either increase outstanding principal amount third lien notes company unable increase principal amount issuance additional third lien notes interest computed basis 360day year comprised twelve 30day months rate 1 per annum first four years increasing 12 per annum maturity ·conversion principal balance convertible notes including payment kind interest thereon convertible new shares conversion rate based initial price per share 9560 per new ordinary share subject adjustment described third lien indenture convertible notes convertible prior third anniversary issue date february 10 2016 upon instruction holders majority principal amount convertible notes ii upon full final resolution potential investigation claims defined determined good faith board directors company “board” determination shall require affirmative vote supermajority nonmanagement directors b february 10 2019 maturity date december 31 2030 upon approval board approval shall require affirmative vote supermajority nonmanagement directors purposes “supermajority nonmanagement directors” means five affirmative votes nonmanagement directors assuming six nonmanagement directors eligible vote circumstances affirmative vote least 75 nonmanagement directors eligible vote ii “investigation claim” means claim held united states brazilian governmental unit arising related procurement certain agreement provision drilling services dated february 4 2009 petrobras venezuela investments services bv vantage deepwater company amended modified supplemented novated time vdc note effective company’s emergence bankruptcy vdc’s former equity interest company cancelled immediately following event company issued 655095 new shares vdc repayment approximately 620 million including accrued interest vdc note ·all trade payables credits wages related obligations unimpaired reorganization plan reorganization plan allowed company continue business operations court proceedings maintain operating assets agreements company adequate liquidity prior filing seek debtorinpossession financing 2015 prior entering reorganization plan retired approximately 794 million principal amount prebankruptcy debt including approximately 401 million scheduled maturities 2014 retired approximately 1863 million principal amount prebankruptcy debt including 635 million scheduled term loan maturities contractual obligations table set forth december 31 2015 contractual obligations excluding approximately 27 billion prebankruptcy debt classified liabilities subject compromise liabilities subject compromise discharged connection implementation prepackaged reorganization plan upon emergence bankruptcy february 10 2016 figures included table based estimates assumptions obligations including duration factors contractual obligations may actually pay future periods may vary reflected table estimates assumptions subjective 1 amounts represent interest payments prepetition credit facility discharged per reorganization plan february 2016 2 amounts represent lease payments existing operating leases enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases table set forth pro forma contractual obligations december 31 2015 gives effect reorganization plan upon emergence bankruptcy february 10 2016 figures included table based estimates assumptions obligations including duration factors contractual obligations actually pay future periods may vary reflected table estimates assumptions subjective 1 amounts represent lease payments existing operating leases enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims believe ultimate resolution existing litigation claims disputes material adverse effect financial position results operations cash flows additionally described herein including notes 1 6 financial statements company presently cooperating ongoing doj sec investigation potential violations fcpa arising actions hamylton padilha brazilian agent company used contracting titanium explorer drillship petrobras nobu su time alleged bribery scheme member board directors significant shareholder predecessor company vantage drilling company although cannot predict outcome matter doj andor sec determine violations us foreign corrupt practices act “fcpa” occurred company could subject civil criminal sanctions including monetary penalties well additional requirements andor changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payable critical accounting estimates preparation financial statements related disclosures accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period management believes current estimates appropriate reasonable actual results could materially differ estimates identified policies critical business operations understanding financial operations bankruptcy accounting guidance connection bankruptcy filing december 3 2015 vdi subject requirements asc 852 asc 852 generally change manner financial statements prepared however require financial statements distinguish transactions events directly associated reorganization ongoing operations business revenues expenses realized gains losses provisions losses directly associated reorganization business must reported separately reorganization items consolidated statements operations required distinguish prepetition liabilities subject compromise postpetition liabilities balance sheet liabilities may affected plan reorganization must reported amounts expected allowed bankruptcy court even may settled lesser amounts result plan reorganization connection emergence bankruptcy believe qualify freshstart accounting upon adoption freshstart accounting assets liabilities recorded fair value freshstart reporting date emergence date fair values assets liabilities date may differ materially recorded values assets liabilities reflected historical consolidated financial statements addition adoption freshstart accounting may materially affect results operations following freshstart reporting dates new basis assets liabilities consequently historical financial statements reliable indicators financial condition results operations period adopt freshstart accounting variable interest entities addition consolidation majority owned subsidiaries also consolidate variable interest entities “vies” determined primary beneficiary determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie certain subsidiaries vdc guarantors prepetition debt part reorganization plan discussed became subsidiaries upon emergence february 10 2016 consolidated entities consolidated financial statements december 31 2015 2014 two years ended december 31 2015 determined vies primary beneficiary property equipment longlived assets primarily consisting values drilling rigs significant amount total assets make judgments regard carrying value assets including amounts capitalized componentization depreciation amortization methods salvage values estimated useful lives capitalize interest costs related financings drilling rigs construction prior commencement vessel’s first contract increased carrying value drilling rigs weighted average cost capital key component used calculation capitalized interest directly impacted volatility global financial credit markets completion construction project impact amount interest expense prospectively recognized results operations evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines oil natural gas prices worldwide rig counts utilization reduced access credit markets significant adverse economic news could require us evaluate realization drilling rigs rapid significant decline oil prices last six months 2014 throughout 2015 coupled steep capital budget cuts exploration production companies significant number newbuild ultra deepwater floaters jackups deliveries scheduled 2015 2016 required us undertake analysis recoverability carrying value drilling rigs assumptions used analysis including used annual longterm budgetary process included expected utilization revenue efficiency rates expected dayrates operating expenses life expectancy planned outofservice time special periodic surveys inspections results analysis indicated december 31 2015 estimated undiscounted future cash flows exceeded carrying values drilling rigs factors ranging 13x 27x revenue recognized services performed based contracted dayrates number operating days period connection customer contract may receive lumpsum fees mobilization equipment personnel mobilization fees costs incurred mobilize rig one geographic market another deferred recognized straightline basis term contract excluding option periods costs incurred mobilize rig without contract expensed incurred fees lumpsum payments received capital improvements rigs deferred amortized income term related drilling contract costs capital improvements capitalized depreciated useful lives assets revenue deferred drilling contracts totaled 202 million 722 million december 31 2015 2014 respectively deferred revenue included either accrued liabilities longterm liabilities consolidated balance sheet based upon initial term related drilling contract rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement tax basis assets liabilities result future taxable deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes income tax expense recent accounting standards see “note 2 basis presentation significant accounting policies” consolidated financial statements included elsewhere report item 7aitem 7 management’s discussion analysis financial condition results operations following discussion intended assist understanding financial position december 31 2017 2016 results operations years ended december 31 2017 2015 periods february 10 2016 december 31 2016 “successor period” january 1 2016 february 10 2016 “predecessor period” successor period predecessor period referred results operations two distinct reporting periods result emergence bankruptcy february 10 2016 following discussion read conjunction information contained “item 1 business” “item 1a risk factors” “item 8 financial statements supplementary data” elsewhere annual report form 10k certain previously reported amounts reclassified conform current year presentation overview international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused international markets additionally drilling units owned others provide construction supervision services construction preservation management services stacked operations marketing services operating rigs following table sets forth certain information concerning offshore drilling fleet february 28 2018 1 drillships designed drill 12000 feet water platinum explorer titanium explorer tungsten explorer currently equipped drill 10000 feet water april 2017 purchased vantage 260 class 15444c jackup rig related multiyear drilling contract august 2017 substituted sapphire driller baker marine pacific class 375 jackup rig fulfill drilling contract october 19 2017 entered purchase sale agreement sell vantage 260 transaction closed vantage 260 sold february 26 2018 reorganization december 3 2015 filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 district court delaware confirmed company’s prepackaged reorganization plan emerged bankruptcy effective date pursuant terms reorganization plan prebankruptcy term loans senior notes retired effective date issuing debtholders 4344959 units reorganized company unit securities originally consisted one new share 17261 principal convertible notes subject adjustment upon payment pik interest certain cases redemption conversion convertible notes well share splits share dividends consolidation reclassification new shares new shares convertible notes subject terms agreement prohibits new shares convertible notes traded separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2017 taking account payment pik interest convertible notes date unit consisted one new share 17590 principal convertible notes significant elements reorganization plan included second amended restated credit agreement company’s prepetition credit agreement amended restated replace 320 million revolving letter credit commitment prepetition facility new 320 million revolving letter credit facility ii repay 150 million outstanding borrowings prepetition facility 70 million cash b issuance 1430 million initial term loans 10 senior secured second lien notes holders company’s prepetition secured debt claims eligible participate rights offering conducted company 750 million company’s 10 second lien notes connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds 739 million deducting cash portion backstop premium vdc note effective company’s emergence bankruptcy vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new shares accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date reorganization plan allowed company maintain operating assets agreements trade payables credits wages related obligations unimpaired reorganization plan upon emergence bankruptcy effective date accordance financial accounting standards board “fasb” accounting standards codification “asc” 852 reorganizations “asc 852” adopted freshstart accounting accordance asc 852 resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated balance sheet december 31 2016 related adjustments thereto recorded consolidated statements operations reorganization items result consolidated balance sheets consolidated statements operations subsequent effective date comparable consolidated balance sheets statements operations prior effective date consolidated financial statements related notes presented black line division delineates lack comparability amounts presented february 10 2016 dates prior financial results periods following application freshstart accounting different historical trends differences may material business outlook expectations future oil natural gas prices historically key driver demand services international energy agency “agency” january 2018 oil market report forecasts growth demand 13 million barrels per day 2018 global demand estimated reach 991 million barrels per day represents favorable growth demand expected fully offset surplus production high inventories remain continue negatively impact oil prices continuing uncertainty around viability length reductions production agreed opec incremental production capacity nonopec countries including growing production us shale activity continue contribute uncertain oil price environment result reduced oil prices since 2014 exploration development companies significantly reduced capital expenditures period continued low levels spending expected 2018 recent analyst surveys exploration production spending indicate oil gas companies continue operate reduced capital expenditures expect offshore drilling programs operators remain curtailed higher sustainable crude oil prices achieved accordingly anticipate industry continue experience depressed market conditions 2018 addition reduction demand drilling rigs additional supply newbuild rigs depressing market according bassoe offshore currently 99 jackups 29 deepwaterharsh environment floaters order shipyards scheduled deliveries extending april 2021 unclear drilling rigs actually delivered many rig deliveries already deferred later dates rig orders canceled response oversupply drilling rigs number competitors removing older less efficient rigs fleets either cold stacking drilling rigs taking permanently service since oil price decline 2014 123 rigs average age approximately 36 years removed drilling fleet according bassoe offshore 123 rigs 83 semisubmersibles 18 drillships 22 jackups expect drilling rig cold stacking scrapping conversion nondrilling use continue 2018 believe important element bringing supply drilling rigs back balance demand anticipate sufficient materially improve market conditions 2018 following table reflects summary contract drilling backlog coverage days contracted related revenue december 31 2017 forward based information available time results operations operating results contract drilling services dependent three primary metrics available days rig utilization dayrates following table sets forth selected operational information periods indicated 1 available days total number rig calendar days period rigs removed upon classification held sale longer eligible earn revenue 2 utilization calculated percentage actual number revenue earning days divided available days period revenue earning day defined day rig earns dayrate commencement operations 3 average daily revenues based contract drilling revenues divided revenue earning days average daily revenue differ average contract dayrate due billing adjustments nonproductive time mobilization fees demobilization fees year ended december 31 2017 successor period predecessor period net loss year ended december 31 2017 “current year” 1498 million 2996 per basic diluted share operating revenues 2128 million net loss successor period 1474 million 2948 per basic diluted share operating revenues 1586 million net loss attributable vdi predecessor period 4710 million operating revenues 235 million following table analysis operating results current year successor period predecessor period revenue current year jackup utilization averaged 82 emerald driller aquamarine driller working throughout remaining three jackups working combined additional 633 days generated combined average daily revenue 62556 across jackup fleet successor period aquamarine driller worked throughout topaz driller completed contract early july 2016 sapphire driller worked approximately 31 days shortterm contract west africa additionally emerald driller commenced contract qatar november 2016 working approximately 56 days successor period rigs generated average daily revenue approximately 88450 per day successor period predecessor period two jackups working average daily revenue approximately 88347 per day sapphire driller completed contract november 2015 work predecessor period emerald driller completed contract early january 2016 deepwater utilization current year averaged 36 tungsten explorer working throughout platinum explorer commencing contract india late november 2017 deepwater utilization successor period predecessor period averaged 33 tungsten explorer worked throughout periods neither two ultradeepwater drillships worked successor period predecessor period platinum explorer completed initial 5year contract fourth quarter 2015 titanium explorer drilling contract cancelled operator august 2015 ultradeepwater drillships generated average daily revenue 265887 per day 263043 per day 332715 per day current year successor period predecessor period respectively average daily revenues declined jackups drillships since 2015 drilling contractors reduced dayrates effort keep rigs working market supply drilling rigs continues exceed demand rigs end 2017 jackups two drillships contracted whereas one drillship two jackup rigs operating end 2016 management fees current year successor period averaged approximately 4000 per day 12500 per day respectively predecessor period management fees averaged approximately 18800 per day per day management fees decreased completed predelivery construction phase management contract supervise manage construction two ultradeepwater drillships third party reimbursable revenue current year successor period 208 million 202 million respectively reimbursable revenue predecessor period 19 million reimbursable revenue dependent rig utilization project status construction management contracts operating costs operating costs current year approximately 1617 million including 122 million reimbursable costs average daily cost approximately 54300 per available day excluding reimbursables operating costs successor period approximately 1230 million including 159 million reimbursable costs average daily cost approximately 47000 per available day excluding reimbursables increase per day costs current year primarily result increased operations together costs associated reactivation platinum explorer topaz driller sapphire driller 2017 predecessor period operating costs approximately 252 million including approximately 14 million reimbursable costs average approximately 85200 per available day excluding reimbursables general administrative expenses general administrative expenses current year successor period 416 million 369 million respectively including approximately 189 million 122 million respectively expenses associated internal fcpa investigation petrobras arbitration nonroutine legal matters similar charges incurred predecessor period totaled 531000 total general administrative charges approximately 26 million general administrative expenses successor period also included accrued severance costs 57 million connection resignations former executives additionally general administrative expenses current year successor period include approximately 40 million 402000 noncash sharebased compensation expense respectively sharebased compensation expense predecessor period depreciation expense predecessor period depreciation expense based historical cost basis property equipment upon emergence bankruptcy applied provisions freshstart accounting revalued property equipment fair value resulted significant decrease historical values depreciation expense current year successor period based reduced asset values property equipment resulting adoption freshstart accounting interest expense financing charges interest expense current year successor period calculated debt issued connection emergence bankruptcy february 2016 interest expense predecessor period calculated debt prior credit agreement provided reorganization plan debt vdc note issued connection reorganization plan interest expense current year successor period includes approximately 570 million 503 million respectively noncash payment kind interest amortization debt discount deferred financing costs reorganization items predecessor period incurred 227 million postpetition professional fees associated bankruptcy cases additionally incurred noncash charges 206 billion freshstart accounting adjustments offset 163 billion noncash gain settlement lstc successor period incurred 14 million professional fee expenses connection bankruptcy cases reorganization related expenses incurred current year bargain purchase gain recorded bargain purchase gain 19 million current year related vantage 260 acquisition gain bargain purchase resulted excess net fair value assets acquired liabilities assumed acquisition purchase price believe able negotiate bargain purchase price result operational presence west africa seller’s liquidation income tax expense current year successor period predecessor period losses income taxes resulting negative tax rates income taxes generally dependent upon results operations local income taxes jurisdictions operate increase taxes current year primarily due increases income tax due operational status rigs 2017 impact corporate tax rate decrease deferred tax assets relation us activity jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt reorganization expenses successor period predecessor period year ended december 31 2015 net loss successor period 1474 million 2948 per basic diluted share operating revenues 1586 million net loss attributable vdi predecessor period 4710 million operating revenues 235 million net income attributable vdi year ended december 31 2015 172 million operating revenues 7723 million following table analysis operating results successor period predecessor period year ended december 31 2015 revenue successor period aquamarine driller worked throughout topaz driller completed contract early july 2016 sapphire driller worked approximately 31 days shortterm contract west africa additionally emerald driller commenced contract qatar november 2016 resulted working approximately 56 days successor period rigs generated average daily revenue approximately 88450 per day successor period deepwater utilization successor period averaged 33 tungsten explorer worked period neither two ultradeepwater drillships worked successor period platinum explorer completed initial 5year contract fourth quarter 2015 titanium explorer drilling contract cancelled operator august 2015 average daily revenues declined jackups drillships drilling contractors reduced dayrates effort keep rigs working market supply drilling rigs exceeded demand rigs one drillship two jackup rigs operating 2016 predecessor period two jackups working average daily revenue approximately 88347 per day sapphire driller completed contract november 2015 work predecessor period emerald driller completed contract early january 2016 deepwater utilization predecessor period averaged 33 tungsten explorer drillship operating throughout period year ended december 31 2015 seven rigs operating year contracts customers substantially higher dayrates successor period year ended december 31 2015 utilization four jackups averaged approximately 77 average daily revenue 133870 three drillships average utilization 83 average daily revenue 635061 management fees successor period averaged approximately 12497 per day predecessor period management fees averaged approximately 18800 per day 2016 approximately 20551 per day 2015 reimbursable revenue successor period 202 million four rigs working period reimbursable revenue predecessor period 19 million 2016 three rigs worked entire period 380 million 2015 seven rigs worked period operating costs operating costs successor period approximately 1230 million approximately 53900 per rig per day including 159 million reimbursable costs predecessor period operating costs 252 million approximately 90000 per day based total available days operating costs year ended december 31 2015 approximately 3596 million including 263 million reimbursable costs reduction operating costs reflects reduced costs associated idled rigs well cost saving initiatives implemented 2016 operating stacked rigs general administrative expenses general administrative expenses successor period includes expenses approximately 122 million associated internal fcpa investigation petrobras arbitration nonroutine legal matters accrued severance costs 57 million connection resignations former executives addition normal recurring general administrative expenses similar severance charges incurred predecessor period year ended december 31 2016 depreciation expense predecessor period depreciation expense based historical cost basis property equipment approximately 35 billion december 31 2015 upon emergence bankruptcy applied provisions freshstart accounting revalued property equipment fair value resulted significant decrease historical values depreciation expense successor period based reduced asset value approximately 8911 million february 10 2016 result adoption freshstart accounting interest expense financing charges interest expense successor period calculated debt issued connection emergence bankruptcy february 10 2016 successor period cash interest expense approximately 167 million additionally recorded noncash pik interest expense 67 million recorded noncash amortization debt discount deferred financing costs 436 million interest expense predecessor period calculated old debt prior credit agreement provided reorganization plan debt vdc note issued connection reorganization plan interest expense year ended december 31 2015 calculated outstanding debt period significantly higher postpetition debt gain extinguishment debt year ended december 31 2015 repurchased open market discount face value 318 million 75 senior notes 75 million 2017 term loan recognized gains 93 million 15 million respectively including writeoff deferred financing costs 10 million reorganization items predecessor period incurred 227 million postpetition professional fees associated bankruptcy cases additionally incurred noncash charges 206 billion freshstart accounting adjustments offset 163 billion noncash gain settlement lstc income tax expense successor period predecessor period loss income taxes resulting negative tax rates income taxes generally dependent upon results operations local income taxes jurisdictions operate decreases taxes successor period predecessor period primarily due decreases income taxes due nonoperational status majority rigs 2016 jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt reorganization expenses liquidity capital resources december 31 2017 working capital approximately 2288 million including approximately 1955 million cash available general corporate purposes scheduled principal debt maturities interest payments december 31 2018 approximately 282 million anticipate expenditures december 31 2018 sustaining capital expenditures rig fleet capital spares information technology general corporate projects approximately 15 million 20 million rigs obtain new contracts could incur reactivation mobilization costs rigs well customer requested equipment upgrades costs could significant may fully recoverable customer additionally december 31 2018 anticipate incremental expenditures special periodic surveys major repair maintenance expenditures equipment certifications approximately 180 million 220 million december 31 2017 149 million available issuance letters credit revolving letter credit facility february 2017 executed purchase sale agreement third party acquire vantage 260 jackup rig related multiyear drilling contract 130 million payment 13 million made upon execution agreement remaining 117 million paid upon closing april 5 2017 october 19 2017 entered purchase sale agreement sell vantage 260 transaction closed vantage 260 sold february 26 2018 table includes summary cash flow information periods indicated changes cash flows operating activities driven changes net income see discussion changes net income “results operations” periods changes cash flows used investing activities dependent upon level capital expenditures varies based timing projects cash used acquisition vantage 260 related drilling contract totaled 130 million current year cash used capital expenditures approximately 120 million successor period related primarily final installment payments capital spares drilling fleet current year successor period made scheduled maturity payments postbankruptcy debt totaling 14 million predecessor period received proceeds 739 million net debt issuance costs 23 million issuance 10 second lien notes additionally made 70 million payment prepetition credit agreement predecessor period significant elements postpetition debt described “note 5 debt” consolidated financial statements included elsewhere report enter operating leases normal course business office space housing vehicles specified operating equipment leases contain options would cause future cash payments change exercised options contractual obligations table set forth contractual obligations december 31 2017 figures included table based estimates assumptions obligations including duration factors contractual obligations may actually pay future periods may vary reflected table estimates assumptions subjective 1 amount represents december 31 2030 maturity value including pik interest convertible notes 2 interest 2016 term loan facility payable libor plus 65 libor floor 05 december 31 2017 interest rate 8069 rate used calculate interest payments maturity date december 31 2019 3 amounts represent lease payments existing operating leases enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases 4 amounts consist obligations external vendors primarily related materials spare parts consumables related supplies drilling rigs commitments contingencies subject litigation claims disputes ordinary course business may covered insurance information regarding legal proceedings set forth “note 8 commitments contingencies” consolidated financial statements included elsewhere report inherent risk litigation dispute assurance given outcome claims believe ultimate resolution existing litigation claims disputes material adverse effect financial position results operations cash flows critical accounting estimates preparation financial statements related disclosures accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period management believes current estimates appropriate reasonable actual results could materially differ estimates identified policies critical business operations understanding financial operations freshstart accounting effective bankruptcy filing december 3 2015 subject requirements asc 852 expenses realized gains losses provisions losses directly associated bankruptcy proceedings classified “reorganization items” consolidated statements operations certain prepetition liabilities subject chapter 11 proceedings considered lstc petition date prior emergence bankruptcy effective date lstc classification distinguished liabilities expected compromised liabilities incurred postpetition upon emergence bankruptcy adopted freshstart accounting resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated balance sheet december 31 2016 related adjustments thereto recorded consolidated statement operations reorganization items period january 1 2016 february 10 2016 property equipment longlived assets primarily consisting values drilling rigs significant amount total assets make judgments regard carrying value assets including amounts capitalized componentization depreciation amortization methods salvage values estimated useful lives drilling rigs depreciated component basis estimated useful lives straightline basis date placed service assets depreciated upon placement service estimated useful lives straightline basis evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy february 10 2016 adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value december 31 2017 triggering event occurred indicate current carrying value drilling rigs may recoverable revenue recognized services performed based contracted dayrates number operating days period connection customer contract may receive lumpsum fees mobilization equipment personnel mobilization fees costs incurred mobilize rig one geographic market another deferred recognized straightline basis term contract excluding option periods costs incurred mobilize rig without contract expensed incurred fees lumpsum payments received capital improvements rigs deferred amortized income term related drilling contract costs capital improvements capitalized depreciated useful lives assets revenue deferred drilling contracts totaled 68 million december 31 2017 deferred revenues drilling contracts december 31 2016 deferred revenue included either accrued liabilities longterm liabilities consolidated balance sheet based upon initial term related drilling contract change revenue recognition standard adoption asc topic 606 adopt asc topic 606 revenue contracts customers january 1 2018 standard outlines fivestep model whereby revenue recognized performance obligations within contract satisfied standard also requires new expanded disclosures regarding revenue recognition adopt new revenue standard using modified retrospective approach recognizing cumulative effect initially applying new standard outstanding contracts increase opening balance retained earnings expect adjustment immaterial applying new standard plan account integrated services provided within drilling contracts single performance obligation composed series distinct time increments satisfied time consideration relate distinct good service mobilization demobilization revenue allocated across single performance obligation recognized series distinct time increments within term contract components consideration within contract including dayrate revenue continue recognized period services performed associated payments relate specifically efforts provide services expect revenue recognition asc 606 differ current revenue recognition pattern relates demobilization revenue demobilization revenue currently recognized upon completion drilling contract estimated contract commencement recognized term contract new guidance additionally currently expect cumulative effect adjustment opening balance retained earnings significant primarily consist impact timing difference related recognition demobilization revenue affected contracts one current contracts includes demobilization revenue rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods intangible assets connection acquisition vantage 260 related multiyear drilling contract company recorded identifiable intangible asset 126 million fair value acquired favorable drilling contract fair value contract calculated using estimates future performance contract including operating efficiency operating expenditures income taxes resulting intangible asset amortized straightline basis remaining twoyear term drilling contract income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable tax deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense recent accounting standards see “note 2 basis presentation significant accounting policies” consolidated financial statements included elsewhere report item 7aitem 7 management’s discussion analysis financial condition results operations following discussion intended assist understanding financial position december 31 2018 2017 results operations years ended december 31 2018 2017 periods february 10 2016 december 31 2017 “successor period” january 1 2016 february 10 2016 “predecessor period” successor period predecessor period referred results operations two distinct reporting periods result emergence bankruptcy february 10 2016 following discussion read conjunction information contained “item 1 business” “item 1a risk factors” “item 8 financial statements supplementary data” elsewhere annual report form 10k certain previously reported amounts reclassified conform current year presentation overview international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused international markets additionally drilling units owned others provide construction supervision services rigs construction preservation management services rigs stacked operations marketing services operating rigs following table sets forth certain information concerning offshore drilling fleet february 28 2019 1 soehanah currently bareboat charter affiliate pt apexindo pratama duta tbk 2 drillships designed drill 12000 feet water platinum explorer titanium explorer tungsten explorer currently equipped drill 10000 feet water reorganization december 3 2015 filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 united states district court district delaware confirmed company’s prepackaged reorganization plan emerged bankruptcy effective date pursuant terms reorganization plan prebankruptcy term loans senior notes retired effective date issuing debtholders 4344959 units reorganized company unit securities originally consisted one new share 17261 principal convertible notes subject adjustment upon payment pik interest certain cases redemption conversion convertible notes well share splits share dividends consolidation reclassification new shares new shares convertible notes subject terms agreement prohibits new shares convertible notes traded separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2018 taking account payment pik interest convertible notes date unit consisted one new share 17766 principal convertible notes significant elements reorganization plan included second amended restated credit agreement company’s prepetition credit agreement amended restated replace 320 million revolving letter credit commitment prepetition facility new 320 million revolving letter credit facility ii repay 1500 million outstanding borrowings prepetition facility 70 million cash b issuance 1430 million initial term loans november 2018 obligations 2016 term loan facility repaid 2016 term loan facility credit agreement terminated connection issuance 925 first lien notes see “businessrecent developmentsrefinancing” 10 senior secured second lien notes holders company’s prepetition secured debt claims eligible participate rights offering conducted company 750 million 10 second lien notes connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds 739 million deducting cash portion backstop premium november 2018 10 second lien notes redeemed connection issuance 925 first lien notes see “businessrecent developmentsrefinancing” vdc note effective company’s emergence bankruptcy vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new shares accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date reorganization plan allowed company maintain operating assets agreements trade payables credits wages related obligations unimpaired reorganization plan upon emergence bankruptcy effective date accordance financial accounting standards board “fasb” accounting standards codification “asc” 852 reorganizations “asc 852” adopted freshstart accounting accordance asc 852 resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated balance sheet december 31 2016 related adjustments thereto recorded consolidated statements operations reorganization items result consolidated balance sheets consolidated statements operations subsequent effective date comparable consolidated balance sheets statements operations prior effective date consolidated financial statements related notes presented black line division delineates lack comparability amounts presented february 10 2016 dates prior financial results periods following application freshstart accounting different historical trends differences may material business outlook expectations future oil natural gas prices historically key driver demand services international energy agency “agency” january 2019 oil market report forecasts global oil demand growth estimates 14 million barrels per day 2019 demand growth 13 million barrels per day 2018 although oil prices partially rebounded historical lows experienced early 2016 reaching highs near 80 per barrel early october 2018 oil prices continue fluctuate ending 2018 near 50 per barrel currently trading around 60 per barrel result price volatility uncertainty future operators generally adopted cautious approach offshore capital expenditures addition reduction demand drilling rigs additional supply newbuild rigs depressing market according bassoe offshore “bassoe” currently 71 jackups 29 deepwaterharsh environment floaters order shipyards scheduled deliveries extending june 2021 unclear drilling rigs actually delivered many rig deliveries already deferred later dates rig orders canceled response oversupply drilling rigs number competitors removing older less efficient rigs fleets either cold stacking drilling rigs taking permanently service furthermore according bassoe 216 rigs average age approximately 36 years removed drilling fleet since oil price decline 2014 216 rigs 118 floaters semisubmersibles drillships 98 jackups believe rig recycling important element bringing supply drilling rigs back alignment demand anticipate sufficient materially improve market conditions 2019 response market conditions excessive levels idle capacity recent years intense pressure operating dayrates drilling contractors generally prefer maintain rigs active state customers generally favor recently operating rigs reactivated coldstacked rigs therefore opportunities services increased past year increases dayrates limited jackup sector pricing improvements yet observed floater sector following table reflects summary contract drilling backlog coverage days contracted related revenue december 31 2018 forward based information available time results operations operating results contract drilling services dependent three primary metrics available days rig utilization dayrates following table sets forth selected operational information periods indicated 1 available days total number rig calendar days period rigs excluded bareboat charter contracts removed upon classification held sale longer eligible earn revenue 2 utilization calculated percentage actual number revenue earning days divided available days period revenue earning day defined day rig earns dayrate commencement operations 3 average daily revenues based contract drilling revenues divided revenue earning days average daily revenue differ average contract dayrate due billing adjustments nonproductive time mobilization fees demobilization fees years ended december 31 2018 2017 net loss year ended december 31 2018 “current year” 1415 million 2829 per basic diluted share operating revenues 2257 million compared net loss year ended december 31 2017 “comparable year” 1498 million 2996 per basic diluted share operating revenues 2128 million following table analysis operating results year ended december 31 2018 2017 revenue total revenue increased 6 contract drilling revenue increased 7 current year compared comparable year increase contract drilling revenue current year primarily due commencement operations platinum explorer contributed incremental 287 million contract drilling revenue current year higher utilization jackups contributed incremental drilling revenues 08 million current year 37 revenue earning days comparable year increases partially offset lower utilization tungsten explorer completion operations west africa october 2018 resulted 165 million decreased drilling revenue current year tungsten explorer currently undergoing certain equipment recertifications upgrades canary islands management fees reimbursable revenue current year 12 million 210 million respectively compared 15 million 208 million respectively comparable year operating costs operating costs current year increased 6 compared comparable year deepwater operating costs current year increased 150 million due primarily incremental costs platinum explorer operations india commenced november 2017 operating costs jackup fleet current year decreased 58 million compared comparable year included costs associated reactivation topaz driller sapphire driller jackup operating cost decreases current year included gain disposal vantage 260 amount 29 million jackup operating costs current year comparable year included 63 million 47 million respectively noncash amortization contract value acquired vantage 260 general administrative expenses decreases general administrative expenses current year compared comparable year primarily due 108 million decrease legal expenses associated nonroutine legal matters including internal fcpa investigation petrobras arbitration general administrative expenses current year comparable year included approximately 52 million 29 million respectively noncash sharebased compensation expense depreciation expense depreciation expense current year decreased 5 compared comparable year due primarily drill pipe assets becoming fully depreciated interest income interest income current year increased 11 million compared comparable year due higher interest rates increased cash available investing interest expense financing charges interest expense current year increased 3 compared comparable year due rising interest rates increased paymentinkind interest compounding convertible notes interest expense included noncash discount accretion paymentinkind interest deferred financing costs totaling approximately 576 million 570 million current year comparable year respectively loss debt extinguishment november 2018 paid approximately 03 million prepayment interest penalties wrote approximately 10 million deferred financing costs connection early redemption outstanding 10 second lien notes net functional currency us dollar however portion revenues earned expenses incurred certain subsidiaries denominated currencies us dollar transactions remeasured us dollars based combination current historical exchange rates net foreign currency exchange loss 15 million net foreign currency exchange gain 28 million included net current year comparable year respectively bargain purchase gain recorded bargain purchase gain 19 million comparable year related vantage 260 acquisition gain bargain purchase resulted excess net fair value assets acquired liabilities assumed acquisition purchase price believe able negotiate lower purchase price result operational presence west africa seller’s liquidation income tax provision current year comparable year losses income taxes resulting negative tax rates income taxes generally dependent upon results operations local income taxes jurisdictions operate increase taxes current year primarily due increases taxable income due operational status rigs 2018 jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt gains losses disposal transfer assets comparable year successor period predecessor period net loss year ended december 31 2017 1498 million 2996 per basic diluted share operating revenues 2128 million net loss successor period 1474 million 2948 per basic diluted share operating revenues 1586 million net loss attributable vdi predecessor period 4710 million operating revenues 235 million following table analysis operating results comparable year successor period predecessor period revenue comparable year jackup utilization averaged 82 emerald driller aquamarine driller working throughout remaining three jackups working combined additional 633 days generated combined average daily revenue 62556 across jackup fleet successor period aquamarine driller worked throughout topaz driller completed contract early july 2016 sapphire driller worked approximately 31 days shortterm contract west africa additionally emerald driller commenced contract qatar november 2016 working approximately 56 days successor period rigs generated average daily revenue approximately 88450 per day successor period predecessor period two jackups working average daily revenue approximately 88347 per day sapphire driller completed contract november 2015 work predecessor period emerald driller completed contract early january 2016 deepwater utilization comparable year averaged 36 tungsten explorer working throughout platinum explorer commencing contract india late november 2017 deepwater utilization successor period predecessor period averaged 33 tungsten explorer worked throughout periods neither two ultradeepwater drillships worked successor period predecessor period platinum explorer completed initial 5year contract fourth quarter 2015 titanium explorer drilling contract cancelled operator august 2015 ultradeepwater drillships generated average daily revenue 265887 per day 263043 per day 332715 per day comparable year successor period predecessor period respectively average daily revenues declined jackups drillships since 2015 drilling contractors reduced dayrates effort keep rigs working market supply drilling rigs continues exceed demand rigs end 2017 jackups two drillships contracted whereas one drillship two jackup rigs operating end 2016 management fees comparable year successor period averaged approximately 4000 per day 12500 per day respectively predecessor period management fees averaged approximately 18800 per day per day management fees decreased completed predelivery construction phase management contract supervise manage construction two ultradeepwater drillships third party reimbursable revenue comparable year successor period 208 million 202 million respectively reimbursable revenue predecessor period 19 million reimbursable revenue dependent rig utilization project status construction management contracts operating costs operating costs comparable year approximately 1617 million including 122 million reimbursable costs average daily cost approximately 54300 per available day excluding reimbursables operating costs successor period approximately 1230 million including 159 million reimbursable costs average daily cost approximately 47000 per available day excluding reimbursables increase per day costs comparable year primarily result increased operations together costs associated reactivation platinum explorer topaz driller sapphire driller 2017 predecessor period operating costs approximately 252 million including approximately 14 million reimbursable costs average approximately 85200 per available day excluding reimbursables general administrative expenses general administrative expenses comparable year successor period 416 million 369 million respectively including approximately 189 million 122 million respectively expenses associated internal fcpa investigation petrobras arbitration nonroutine legal matters similar charges incurred predecessor period totaled 531000 total general administrative charges approximately 26 million general administrative expenses successor period also included accrued severance costs 57 million connection resignations former executives additionally general administrative expenses comparable year successor period include approximately 40 million 04 million noncash sharebased compensation expense respectively sharebased compensation expense predecessor period depreciation expense predecessor period depreciation expense based historical cost basis property equipment upon emergence bankruptcy applied provisions freshstart accounting revalued property equipment fair value resulted significant decrease historical values depreciation expense comparable year successor period based reduced asset values property equipment resulting adoption freshstart accounting interest expense financing charges interest expense comparable year successor period calculated debt issued connection emergence bankruptcy february 2016 interest expense predecessor period calculated debt prior credit agreement provided reorganization plan debt vdc note issued connection reorganization plan interest expense comparable year successor period includes approximately 570 million 503 million respectively noncash payment kind interest amortization debt discount deferred financing costs reorganization items predecessor period incurred 227 million postpetition professional fees associated bankruptcy cases additionally incurred noncash charges 206 billion freshstart accounting adjustments offset 163 billion noncash gain settlement lstc successor period incurred 14 million professional fee expenses connection bankruptcy cases reorganization related expenses incurred comparable year bargain purchase gain recorded bargain purchase gain 19 million comparable year related vantage 260 acquisition gain bargain purchase resulted excess net fair value assets acquired liabilities assumed acquisition purchase price believe able negotiate bargain purchase price result operational presence west africa seller’s liquidation income tax expense comparable year successor period predecessor period losses income taxes resulting negative tax rates income taxes generally dependent upon results operations local income taxes jurisdictions operate increase taxes comparable year primarily due increases income tax due operational status rigs 2017 impact corporate tax rate decrease deferred tax assets relation us activity jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt reorganization expenses liquidity capital resources december 31 2018 working capital approximately 2639 million including approximately 2250 million cash available general corporate purposes scheduled principal debt maturities interest payments december 31 2019 approximately 311 million anticipate capital expenditures december 31 2019 approximately 112 million approximately 137 million including expenditures mpd system order increase marketability drillships sustaining capital spares rigs obtain new contracts could incur reactivation mobilization costs rigs well customer requested equipment upgrades costs could significant may fully recoverable customer additionally december 31 2019 anticipate incremental expenditures special periodic surveys major repair maintenance expenditures equipment recertifications approximately 147 million approximately 180 million december 31 2018 363 million available issuance letters credit cash collateralized letter credit facility tungsten explorer’s recently concluded drilling contract ended october 2018 accounted highest dayrate drillships’ drilling contracts current year tungsten explorer currently completing certain equipment recertifications upgrades scheduled work offshore egypt drilling services contract term one well options add three additional wells given current market conditions dayrate associated contract lower rate associated previous drilling contract unlikely able secure additional drilling contracts rates comparable previous rate nearterm table includes summary cash flow information periods indicated changes cash flows operating activities driven changes net income see discussion changes net income “results operations” periods cash flows investing activities current year primarily net result 850 million acquisition soehanah 120 million mpd system drillships partially offset net cash inflow 47 million sale vantage 260 cash used acquisition vantage 260 related drilling contract totaled 130 million comparable year cash used capital expenditures approximately 120 million successor period related primarily final installment payments capital spares drilling fleet current year received financing proceeds 3423 million net debt issuance costs 77 million issuance 925 first lien notes proceeds issuance used repay obligations 2016 term loan facility redeem outstanding 10 second lien notes cash flows financing activities current year also included additional payment 51 million made 2016 term loan facility required conjunction sale vantage 260 comparable year successor period made scheduled maturity payments postbankruptcy debt totaling 14 million predecessor period received proceeds 739 million net debt issuance costs 23 million issuance 10 second lien notes additionally made 70 million payment prepetition credit agreement predecessor period significant elements postpetition debt 925 first lien notes described “note 6 debt” consolidated financial statements included elsewhere report enter operating leases normal course business office space housing vehicles specified operating equipment leases contain options would cause future cash payments change exercised options contractual obligations table set forth contractual obligations december 31 2018 figures included table based estimates assumptions obligations including duration factors contractual obligations may actually pay future periods may vary reflected table estimates assumptions subjective 1 amount represents december 31 2030 maturity value including pik interest convertible notes 2 interest 925 first lien notes payable 925 may november year maturity date november 15 2023 3 amounts represent lease payments existing operating leases net associated sublease proceeds enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases 4 amounts consist obligations external vendors primarily related capital expenditures materials spare parts consumables related supplies drilling rigs november 30 2018 issued 3500 million aggregate principal amount 925 first lien notes private placement par proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection rig purchase iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes 925 first lien notes guaranteed joint several basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes registered securities act state securities laws concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized december 31 2018 363 million available issuance letters credit cash collateralized letter credit facility commitments contingencies subject litigation claims disputes ordinary course business may covered insurance information regarding legal proceedings set forth “note 9 commitments contingencies” consolidated financial statements included elsewhere report inherent risk litigation dispute assurance given outcome claims believe ultimate resolution existing litigation claims disputes material adverse effect financial position results operations cash flows critical accounting estimates preparation financial statements related disclosures accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period management believes current estimates appropriate reasonable actual results could materially differ estimates identified policies critical business operations understanding financial operations freshstart accounting effective bankruptcy filing december 3 2015 subject requirements asc 852 expenses realized gains losses provisions losses directly associated bankruptcy proceedings classified “reorganization items” consolidated statements operations certain prepetition liabilities subject chapter 11 proceedings considered lstc petition date prior emergence bankruptcy effective date lstc classification distinguished liabilities expected compromised liabilities incurred postpetition upon emergence bankruptcy adopted freshstart accounting resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated balance sheet december 31 2016 related adjustments thereto recorded consolidated statement operations reorganization items period january 1 2016 february 10 2016 property equipment longlived assets primarily consisting values drilling rigs significant amount total assets make judgments regard carrying value assets including amounts capitalized componentization depreciation amortization methods salvage values estimated useful lives drilling rigs depreciated component basis estimated useful lives straightline basis date placed service assets depreciated upon placement service estimated useful lives straightline basis evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy february 10 2016 adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value december 31 2018 triggering event occurred indicate current carrying value drilling rigs may recoverable revenue activities primarily drive revenue earned drilling contracts customers include providing drilling rig work crews related equipment services necessary operate rig ii delivering drilling rig mobilizing demobilizing drill site iii performing preoperating activities including rig preparation activities andor equipment modifications required contract integrated drilling services perform drilling contract represents single performance obligation satisfied time comprised series distinct time increments service periods dayrate drilling revenue drilling contracts generally provide payment dayrate basis higher rates periods drilling unit operating lower rates zero rates periods drilling operations interrupted restricted dayrate billed customer determined based varying rates applicable specific activities performed hourly basis dayrate consideration allocated distinct hourly increment relates within contract term therefore recognized perform daily drilling services mobilizationdemobilization revenue connection certain contracts receive lumpsum fees similar compensation mobilization equipment personnel prior commencement drilling services demobilization equipment personnel upon contract completion activities considered distinct within context contract therefore associated revenue allocated overall single performance obligation mobilization fees received prior commencement drilling operations recorded contract liability amortized straightline basis initial contract period demobilization fees expected received upon contract completion estimated contract inception recognized straightline basis initial contract term offset accretive contract asset many contracts demobilization fees contingent upon occurrence nonoccurrence future event estimate revenue may therefore constrained fees received mobilization demobilization equipment personnel included contract drilling revenues capital upgradecontract preparation revenue connection certain contracts receive lumpsum fees similar compensation requested capital upgrades drilling rigs contract preparation work activities considered distinct within context contract therefore fees received recorded contract liability amortized contract drilling revenues straightline basis initial contract term revenues related reimbursable expenses generally receive reimbursements customers purchase supplies equipment personnel services provided request accordance drilling contract agreement generally considered principal transactions therefore recognize reimbursable revenues corresponding costs provide customerrequested goods services rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods intangible assets connection acquisition vantage 260 related multiyear drilling contract company recorded identifiable intangible asset 126 million fair value acquired favorable drilling contract fair value contract calculated using estimates future performance contract including operating efficiency operating expenditures income taxes resulting intangible asset amortized straightline basis remaining twoyear term drilling contract income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable tax deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense change accounting lease arrangements adoption asc topic 842 adopted asc topic 842 leases amended january 1 2019 electing apply standard prospectively restating comparative periods transition method allows initial recognition cumulative catchup adjustment opening balance retained earnings year adoption however based analysis current lease arrangements expect adjustment required standard requires entity recognize rightofuse assets lease liabilities balance sheet leases term longer 12 months disclose key information leasing arrangements new standard provides number optional practical expedients transition expect elect “package practical expedients” permits us reassess new standard prior conclusions lease identification lease classification initial direct costs new standard also provides practical expedients entity’s ongoing accounting expect elect shortterm lease recognition exemption leases qualify also expect elect practical expedient separate lease nonlease components leases drilling contracts contain lease component related underlying drilling equipment addition service component provided crews expertise operate drilling equipment concluded nonlease service component drilling contracts predominant element combined component account combined components single performance obligation topic 606 revenue contracts customers bareboat charter contract recently acquired soehanah jackup rig considered new lease acquisition date accounted operating lease new standard based lease arrangements lessee december 31 2018 expect recognize aggregate lease liability corresponding rightofuse asset 90 million 100 million based currently identified lease portfolio continue refine estimate recent accounting standards see “note 2 basis presentation significant accounting policies” consolidated financial statements included elsewhere report item 7aitem 7 management’s discussion analysis financial condition results operations following discussion intended assist understanding financial position results operations years ended december 31 2020 2019 2018 following discussion read conjunction information contained “item 1 business” “item 1a risk factors” part annual report “item 8 financial statements supplementary data” part ii annual report certain previously reported amounts reclassified conform current year presentation overview international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil gas companies focused international markets additionally drilling units owned others provide construction supervision services rigs construction preservation management services rigs stacked operational marketing services operating rigs following table sets forth certain information concerning offshore drilling fleet march 11 2021 2 drillships designed drill 12000 feet water currently equipped drill 10000 feet water december 31 2020 entered purchase sale agreement defined “organization recent events” sell titanium explorer closed march 10 2021 titanium explorer classified held sale consolidated balance sheet december 31 2020 business outlook expectations future oil gas prices historically key driver demand services january 2021 oil market report international energy agency provided following unprecedented collapse demand oil 88 million barrels per day 2020 expects demand recover 55 million barrels per day 966 million barrels per day 2021 middle 2019 early march 2020 oil prices increased activity levels generally improved oil gas industry including offshore sector rig day rates increasing multiyear highs respect shallow water tendering activity markedly improving deepwater segment however arrival continued global spread covid19 resulting collapse global economic activity coupled shortlived price war saudi arabia russia led significant reductions delays oil gas exploration development plans part operators reductions delays led substantial drop oil prices demand offshore drilling services subsequent second quarter 2020 including services although opec russia major oil gas producing nations reached agreement drastically cut oil production 2020 efforts contain covid19 could continue pose challenges global economic activity supply demand imbalance oil likely continue result decline demand foreseeable future operators drastically cut capital spending offshore space 2020 notwithstanding recent recovery global oil prices since development availability vaccines covid19 ii perception reopening global economies along iii injection substantial government monetary fiscal stimulus volatility uncertainty around global oil prices persist volatility uncertainty surrounding global oil prices made difficult operators plan capital budget programs near term addition macroeconomic challenges including set forth led reduced demand drilling rigs additional supply newbuild rigs continues overhang market according bassoe currently 41 jackups 26 deepwaterharsh environment floaters order shipyards unclear drilling rigs actually delivered many rig deliveries already deferred later dates ii canceled entirely since 2015 response market conditions excessive levels idle capacity recent years intense downward pressure operating dayrates drilling contractors preferred maintain rigs active state customers generally favored operating rigs reactivated coldstacked rigs prior covid19 outbreak downward pressure pricing starting reverse evidenced opportunities services increasing 2019 early 2020 dayrates showing signs general improvement however beginning second quarter 2020 arrival continued spread resulting impact covid19 dayrates rig activity contract opportunities declined significantly response oversupply drilling rigs number competitors began removing older less efficient rigs fleets either cold stacking drilling rigs taking permanently service trend accelerated since second quarter 2020 41 rigs removed drilling fleet 2020 total 284 rigs removed drilling fleet since oil price decline 2014 according pareto offshore expect rig recycling occur warm stacked rigs potentially recently operated rigs joining coldstacked rigs candidates recycling emphasis recycling rigs expected narrow gap somewhat rig supply demand however anticipate reduction supply offshore drilling rigs alone sufficient materially improve ultimately offset impact existing market conditions especially regard deepwater segment significant fleet reduction needed material improvements observed addition expected increase recycling many offshore drillers significant levels debt balance sheets recently completed currently pursuing may elect pursue nearterm debt restructurings debt restructurings may result lower cost structures create additional pressure incentive recycle rigs drillers emerge debt restructurings likely consolidation occur reducing number industry participants potentially increasing market share certain competitors combination recycling restructuring consolidation necessary industry regain firmer footing industry recovery also depend significantly improvements global macroeconomic conditions oil gas industry generally well global economy large significantly impacted spread covid19 unable predict time market conditions may improve estimate ultimate impact current market conditions may financial condition results operations see “risk factorsthe continued global spread covid19 fears relating spread covid19 associated oil market developments could adversely impact financial condition results operations” “the ultimate impact effects spread covid19 resulting pandemic highly uncertain cannot predicted time” part item 1a annual report initial distribution vaccines certain jurisdictions attempt inoculate populations covid19 along significant governmental spending directed combatting challenging economic environment caused covid19 global economic activity appears improved since early 2020 improvement contributed among things increase demand oil gas since dropping multiyear lows second quarter 2020 brent crude oil prices retraced upward reaching healthier levels january 2021 improvement continues sustained operators could begin sanction new activity would lead rigs going back work potentially higher day rates notwithstanding foregoing recovery experienced could short lived especially given quickly changing everevolving dynamics covid19 pandemic following table reflects summary contract drilling backlog coverage days contracted related revenue december 31 2020 thereafter based information made available time information regarding impact current economic environment status certain existing contracts please refer “recent developments” part item 2 well current report form 8k filed sec april 6 2020 supplemented current reports form 8k filed sec may 12 2020 june 2 2020 july 1 2020 respectively results operations operating results contract drilling services dependent three primary metrics available days rig utilization dayrates following table sets forth selected operational information periods indicated 1 available days total number rig calendar days period rigs excluded bareboat charter contracts removed upon classification held sale longer eligible earn revenue 2 utilization calculated percentage actual number revenue earning days divided available days period revenue earning day defined day rig earns dayrate commencement operations 3 average daily revenues based contract drilling revenues divided revenue earning days average daily revenue differ average contract dayrate due billing adjustments nonproductive time mobilization fees demobilization fees years ended december 31 2020 2019 net loss current year 2767 million 2110 per basic share operating revenues 1269 million compared net income comparable year 4557 million 8027 per basic share operating revenues 7608 million following table analysis operating results year ended december 31 2020 2019 revenue total revenue decreased 6340 million due primarily 5940 million revenue received petrobras parties comparable year result termination titanium explorer contract please refer “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report additional details payments received petrobras parties information discussed therein incorporated reference entirety part ii item 7 contract drilling revenue decreased 23 current year compared comparable year decrease primarily due lower utilization three jackup rigs due drilling contracts terminated result volatility oil prices challenges presented spread covid19 turn resulted decrease 463 million contract drilling revenue ii downtime platinum explorer resulted decrease 64 million decreases offset commencement operations soehanah jackup rig contributed additional 175 million contract drilling revenue current year reimbursables revenue current year decreased 74 million compared comparable year primarily result changes drilling contracts discussed immediately resulted decrease 32 million reimbursable revenue termination bareboat charter lease soehanah jackup rig redelivered company february 2020 operating costs operating costs current year decreased 5 compared comparable year primarily result aforementioned changes drilling contracts lower costs incurred warm stacked rigs 38 million decrease operations support costs current year compared comparable year result reductions personnel headcount salaries paid personnel operating costs current year includes approximately 50 million bad debt expense representing current estimate credit losses associated “trade receivables” 18 million fuel helicopter costs would otherwise cost customer amounts represent customer’s decision pay us days impacted believe force majeure events would entitled receive payment contract disagree decision evaluating remedies contract loss impairment three months ended september 30 2020 evaluated deepwater drilling rigs indicators impairment determined carrying value longerterm warm stacked drillship titanium explorer impaired result recognized noncash loss impairment 1289 million see “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” part ii item 8 annual report additional information regarding impairment information discussed therein incorporated reference entirety part ii item 7 general administrative expenses decreases general administrative expenses current year compared comparable year primarily due 1016 million decrease expenses associated nonroutine matters including among others 626 million contingency fee related collection petrobras award 305 million cost judgment preservation insurance insure contingency required return petrobras payment general administrative expenses current year comparable year include approximately 11 million 06 million respectively noncash sharebased compensation expense depreciation expense depreciation expense current year decreased 6 compared comparable year due primarily write carrying value titanium explorer current year interest income interest income current year decreased 1155 million compared comparable year due primarily interest derived petrobras payments received comparable year please refer “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 interest expense financing charges interest expense current year decreased 27 compared comparable year primarily due lower outstanding debt conversion convertible notes december 2019 interest expense included noncash discount accretion pik interest deferred financing costs totaling approximately 16 million 141 million current year comparable year respectively net recorded gain 23 million current year related settlement agreement company subsidiaries one hand vdc subsidiaries see “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report additional detail settlement agreement information discussed therein incorporated reference entirety part ii item 7 functional currency usd however portion revenues earned expenses incurred certain subsidiaries denominated currencies usd transactions remeasured usd based combination current historical exchange rates net foreign currency exchange gain 04 million 02 million included net current year comparable year respectively income tax provision income tax expense decreased current year compared comparable year mainly due change jurisdiction operations tax benefits realized certain jurisdictions income taxes generally dependent upon results operations local income taxes jurisdictions operate jurisdictions pay taxes receive benefits certain income expense items including interest expense disposal gains losses jurisdictions recognize income taxes net income basis deemed profit basis operations usually carried taxable jurisdictions impact income tax provision years ended december 31 2019 2018 comparison results operations fiscal years ended december 31 2019 2018 see “part ii item 7 management’s discussion analysis financial condition results operations” annual report form 10k fiscal year ended december 31 2019 filed sec march 10 2020 liquidity capital resources prolonged low price environment caused spread covid19 resulting decline global economic activity associated oil price market share volatility began reduce liquidity capital resources current year trend could extend subsequent quarters 2021 beyond depending among factors long covid19 remains significant public health crisis global economic activity remains depressed events significant adverse consequences general financial business economic conditions well financial business economic position business customers suppliers may adversely impact ability derive cash flows operations access capital funding third parties future experienced could experience delays collection certain accounts receivables due logistical obstacles office closures resulting covid19 outbreak well impacts longterm liquidity actively seeking assessing viability measures reduce operating costs preserve cash challenging times example reduced annual compensation payable independent members board directors 20 well salaries workforce approximately 15 20 depending position subsequently replaced longerterm 10 reduction annual compensation payable independent members board directors well salary workforce across company beginning july 1 2020 ii secured material price reductions certain vendors iii initiated significant reductions onshore offshore personnel june 2020 reflect lower levels operating activity remain committed actively seeking measures reduce operating costs preserve cash unprecedented times effects decline global economic activity oil price market share volatility may cause us implement additional cost reduction measures alter general financial strategy near longterm december 31 2020 believe maintain adequate cash reserves continuously managing actual cash flow cash forecasts accordingly management believes adequate liquidity fund operations twelve months following date consolidated financial statements issued therefore prepared going concern assumption december 31 2020 working capital approximately 2035 million including approximately 1419 million cash available general corporate purposes scheduled interest payments december 31 2021 approximately 324 million scheduled principal debt maturities 2023 anticipate capital expenditures december 31 2021 approximately 51 million approximately 63 million sustaining capital spares rigs obtain new contracts could incur reactivation mobilization costs rigs well customer requested equipment upgrades costs could significant may fully recoverable customer additionally december 31 2021 anticipate incremental expenditures special periodic surveys major repair maintenance expenditures equipment recertifications approximately 170 million approximately 208 million december 31 2020 399 million available issuance letters credit cash collateralized letter credit facility june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award please refer “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information regarding petrobras agreement petrobras award information discussed therein incorporated reference entirety part ii item 7 table includes summary cash flow information periods indicated changes cash flows operating activities driven changes net income see discussion changes net income “results operations” part ii item 7 cash flows used investing activities comparable year primarily capital expenditures mpd system cash flows used financing activities comparable year primarily special cash distribution paid shareholders record close business december 10 2019 see “note 7 shareholders’ equity” “notes consolidated financial statements” part ii item 8 annual report information comparison cash flows fiscal years ended december 31 2019 2018 see “part ii item 7 management’s discussion analysis financial condition results operations” annual report form 10k fiscal year ended december 31 2019 filed sec march 10 2020 significant elements 925 first lien notes described “note 6 debt” “notes consolidated financial statements” part ii item 8 annual report enter operating leases normal course business office space housing vehicles specified operating equipment leases contain options would cause future cash payments change exercised options contractual obligations table set forth contractual obligations december 31 2020 figures included table based estimates assumptions obligations including duration factors contractual obligations may actually pay future periods may vary reflected table estimates assumptions subjective 1 interest 925 first lien notes payable 925 may november year maturity date november 15 2023 2 amounts represent lease payments existing operating leases enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases 3 amounts consist obligations external vendors primarily related capital expenditures materials spare parts consumables related supplies drilling rigs november 30 2018 issued 3500 million aggregate principal amount 925 first lien notes private placement par proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement governing facility ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection purchase soehanah jackup rig iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes 925 first lien notes guaranteed joint several basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes registered securities act state securities laws concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized december 31 2020 399 million available issuance letters credit cash collateralized letter credit facility commitments contingencies subject litigation claims disputes ordinary course business may covered insurance information regarding legal proceedings set forth “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 inherent risk litigation dispute assurance given outcome claims believe ultimate resolution existing litigation claims disputes material adverse effect financial position results operations cash flows critical accounting estimates preparation financial statements related disclosures accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period significant accounting policies included “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” part ii item 8 annual report management believes current estimates appropriate reasonable actual results could materially differ estimates identified policies critical business operations understanding financial operations discussed development selection disclosure policies estimates audit committee board directors property equipment longlived assets primarily consisting values drilling rigs significant amount total assets make judgments regard carrying value assets including amounts capitalized componentization depreciation amortization methods salvage values estimated useful lives drilling rigs depreciated component basis estimated useful lives straightline basis date placed service assets depreciated upon placement service estimated useful lives straightline basis evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil gas exploration development production expenditures oil gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy effective date adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value result spread covid19 oil price market share volatility tested impairment based impairment indicators identified first quarter 2020 recoverability test performed resulted impairment loss recorded estimated undiscounted cash flows generated drilling rigs exceeded carrying values march 31 2020 projections assumptions used analysis change significantly three months ended june 30 2020 accordingly triggering event occurred indicate carrying value drilling rigs would recoverable time third quarter 2020 identified indicators carrying amounts deepwater asset groups may recoverable indicators included continued impact covid19 global economic activity resulting reductions delays deepwater oil gas exploration development plans part operators leading increased barriers reactivation stacked rigs result impairment testing determined carrying amount longterm warm stacked drillship titanium explorer impaired recognized noncash loss impairment 1289 million september 30 2020 measured fair value titanium explorer applying market approach using estimates exchange price would received assets principal advantageous market measurement date estimate fair value required us use significant observable inputs representative level 3 fair value measurements including marketability rig prices comparable rigs may sold scrap value recoverability test performed two deepwater rigs resulted impairment loss recorded estimated undiscounted cash flows generated rigs exceeded carrying values september 30 2020 platinum explorer currently operating tungsten explorer scheduled recommence operations second quarter 2021 projections assumptions used third quarter 2020 changed significantly december 31 2020 accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable income taxes vdi cayman islands company cayman islands impose corporate income taxes consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes operate multiple countries different legal forms result subject jurisdiction numerous domestic foreign tax authorities well tax agreements treaties among governments tax rates vary jurisdictions tax base rates applied taxes may levied based net profit taxes gross revenues withholding taxes revenue determination income tax expense jurisdiction requires interpretation related tax laws regulations use estimates assumptions regarding significant future events amount timing character deductions permissible revenue recognition methods tax law sources character income tax credits recognize interest penalties related income taxes component income tax expense income tax expense may vary substantially one period another result changes tax laws regulations agreements treaties foreign currency exchange restrictions fluctuations rig movements level operations profitability tax jurisdiction furthermore income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation net operating results income tax expense furthermore jurisdictions pay taxes pay taxes low rates receive benefits certain income expense items including interest expense loss extinguishment debt gains losses disposal transfer assets reorganization expenses writeoff development costs certain jurisdictions taxed preferential tax regimes may require compliance specified requirements sustain tax benefits believe compliance specified requirements continue make reasonable efforts comply however ability meet requirements preferential tax regimes may affected changes laws administrative practices business operations factors affecting company industry many beyond control establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities future distribution made unremitted earnings foreign subsidiaries may required record additional taxes certain jurisdictions however practical time estimate unremitted earnings potential tax liability due complexity hypothetical calculations deferred income tax assets liabilities recorded expected future tax consequences events recognized financial statements tax returns provide deferred taxes temporary differences financial statements tax bases assets liabilities using enacted tax rates expected apply taxable income temporary differences expected reverse deferred tax assets also provided certain tax losses tax credit carryforwards valuation allowance established reduce deferred tax assets likely portion deferred tax asset realized change accounting credit losses adoption asc topic 326 adopted asc topic 326 credit losses amended january 1 2020 electing apply standard prospectively restating comparative periods also adopted asc subtopic 35040 amended january 1 2020 please refer “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 recent accounting standards see “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 item 7aitem 7 management’s discussion analysis financial condition results operations following discussion intended assist understanding financial position december 31 2016 2015 results operations periods february 10 2016 december 31 2016 “successor period” january 1 2016 february 10 2016 “predecessor period” years ended december 31 2015 2014 successor period predecessor period referred results operations two distinct reporting periods result emergence bankruptcy february 10 2016 following discussion read conjunction information contained “item 1 business” “item 1a risk factors” “item 8 financial statements supplementary data” elsewhere annual report form 10k certain previously reported amounts reclassified conform current year presentation overview international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused primarily international markets additionally drilling units owned others provide construction supervision services construction preservation management services stacked following table sets forth certain information concerning offshore drilling fleet february 28 2017 1 drillships designed drill 12000 feet water platinum explorer titanium explorer tungsten explorer currently equipped drill 10000 feet water reorganization december 3 2015 filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 district court delaware confirmed company’s prepackaged reorganization plan emerged bankruptcy effective date pursuant terms reorganization plan prebankruptcy term loans senior notes retired effective date issuing debtholders 4344959 units reorganized company unit securities originally consisted one new share 17261 principal convertible notes subject adjustment upon payment interest kind “pik interest” certain cases redemption conversion convertible notes well share splits share dividends consolidation reclassification new shares reorganization plan every 1000 principal note holder received 1722798 units 2017 term loan 1725087 units 2019 term loan 1786070 units 75 senior notes 1728569 units 7125 senior notes new shares convertible notes subject terms agreement prohibits new shares convertible notes traded separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2016 taking account payment pik interest convertible notes 2016 unit consisted one new share 17415 principal convertible notes significant elements reorganization plan included second amended restated credit agreement company’s prepetition credit agreement amended replace 320 million revolving letter credit commitment prepetition facility new 320 million revolving letter credit facility ii repay 150 million outstanding borrowings prepetition facility 70 million cash b issuance 1430 million 2016 term loan facility 10 senior secured second lien notes holders company’s prepetition secured debt claims eligible participate rights offering conducted company 750 million company’s 10 second lien notes connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds 739 million deducting cash portion backstop premium vdc note effective company’s emergence bankruptcy vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new shares accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date reorganization plan allowed company maintain operating assets agreements trade payables credits wages related obligations unimpaired reorganization plan upon emergence bankruptcy effective date accordance financial accounting standards board “fasb” accounting standards codification “asc” 852 reorganizations “asc 852” adopted freshstart accounting accordance asc 852 resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated balance sheet december 31 2016 related adjustments thereto recorded consolidated statements operations reorganization items result consolidated balance sheets consolidated statements operations subsequent effective date comparable consolidated balance sheets statements operations prior effective date consolidated financial statements related notes presented black line division delineates lack comparability amounts presented february 10 2016 dates prior financial results periods following application freshstart accounting different historical trends differences may material business outlook expectations future oil natural gas prices historically key driver demand services december 2016 monthly average spot price brent crude 53 per bbl according international energy agency “iea” first month since july 2015 brent spot prices averaged 50 per bbl major factor increase price market reaction november 2016 opec agreement cut production 12 million bblday starting january 2017 despite recent opec agreement iea forecasts global oil inventory increases average 03 million bblday 2017 expected persistence excess global supply near term along responsiveness us shale oil production rising oil prices late 2016 expected limit significant upward oil price pressures 2017 brent crude oil prices forecast average 53 per bblday 2017 56 per bblday 2018 result significant decline oil prices exploration development companies significantly reduced capital expenditure budgets 2016 recent analyst surveys exploration production spending indicate oil gas companies continue reduce capital expenditures releasing rigs significantly reducing equipment orders accordingly anticipate industry experience depressed market conditions 2017 potentially beyond addition reduction demand drilling rigs additional supply newbuild rigs depressing market according rigpoint ods currently 103 jackups 44 deepwater floaters order shipyards scheduled deliveries extending 2020 77 jackups 26 deepwater floaters scheduled delivery december 31 2017 unclear drilling rigs actually delivered many rig deliveries already deferred later dates rig orders canceled response oversupply drilling rigs number competitors removing older less efficient rigs fleets either cold stacking drilling rigs taking permanently service since june 2014 74 rigs average age approximately 35 years announced recycling according bassoe offshore 74 rigs 54 semisubmersbiles 12 drillships 8 jackups lower scrap steel prices along low stacking costs negatively affected pace recycling jackups believe recycling important element bringing supply drilling rigs back balance demand sufficient materially improve market conditions 2017 summary backlog coverage days contracted related revenue december 31 2016 results operations operating results contract drilling services dependent three primary metrics available days rig utilization dayrates following table sets forth selected operational information periods indicated 1 available days total number rig calendar days period 2 utilization calculated percentage actual number revenue earning days divided available days period revenue earning day defined day rig earns dayrate commencement operations 3 average daily revenues based contract drilling revenues divided revenue earning days average daily revenue differ average contract dayrate due billing adjustments nonproductive time mobilization fees demobilization fees 2016 2015 following table analysis operating results periods indicated revenue successor period aquamarine driller worked throughout topaz driller completed contract early july 2016 currently mobilizing upcoming contract sapphire driller worked approximately 31 days shortterm contract west africa additionally emerald driller commenced contract qatar november 2016 working approximately 56 days successor period rigs generated average daily revenue approximately 88450 per day successor period deepwater utilization successor period averaged 33 tungsten explorer worked period neither two ultradeepwater drillships worked successor period platinum explorer completed initial 5year contract fourth quarter 2015 titanium explorer drilling contract cancelled operator august 2015 average daily revenue declined jackups drillships drilling contractors reduced dayrates effort keep rigs working market supply drilling rigs continues exceed demand rigs although marketing rigs one drillship two jackup currently operating predecessor period 2016 two jackups working average daily revenue approximately 88347 per day sapphire driller completed contract november 2015 work predecessor period emerald driller completed contract early january 2016 deepwater utilization predecessor period averaged 33 tungsten explorer drillship operating throughout period year ended december 31 2015 seven rigs operating year contracts customers substantially higher dayrates successor period year ending december 31 2015 utilization four jackups averaged approximately 77 average daily revenue 133870 three drillships average utilization 83 average daily revenue 635061 management fees successor period averaged approximately 12497 per day predecessor period management fees averaged approximately 18800 per day 2016 approximately 20551 per day 2015 reimbursable revenue successor period 202 million four rigs working period reimbursable revenue predecessor period 19 million 2016 three rigs worked entire period 380 million 2015 seven rigs worked period operating costs operating costs successor period approximately 1230 million approximately 53900 per rig per day including 159 million reimbursable costs 2016 predecessor period operating costs 252 million approximately 90000 per day based total available days operating costs year ending december 31 2015 approximately 3596 million including 263 million reimbursable costs reduction operating costs reflects reduced costs associated idled rigs well cost saving initiatives implemented 2016 operating stacked rigs general administrative expenses general administrative expenses successor period includes legal expenses approximately 122 million associated internal fcpa investigation petrobras arbitration nonroutine legal matters accrued severance costs 57 million connection resignations former executives addition normal recurring general administrative expenses similar severance charges incurred predecessor period year ended december 31 2015 depreciation expense predecessor period depreciation expense based historical cost basis property equipment approximately 35 billion december 31 2015 upon emergence bankruptcy applied provisions freshstart accounting revalued property equipment fair value resulted significant decrease historical values depreciation expense successor period based reduced asset value approximately 8911 million february 10 2016 result adoption freshstart accounting interest expense financing charges interest expense successor period calculated debt issued connection emergence bankruptcy february 10 2016 successor period cash interest expense approximately 167 million additionally recorded noncash pik interest expense 67 million recorded noncash amortization debt discount deferred financing costs 436 million interest expense predecessor period calculated old credit agreement provided reorganization plan vdc note issued connection reorganization plan interest expense year ended december 31 2015 calculated outstanding debt period significantly higher postpetition debt gain extinguishment debt year ended december 31 2015 repurchased open market discount face value 318 million 75 senior notes 75 million 2017 term loan recognized gains 93 million 15 million respectively including writeoff deferred financing costs 10 million reorganization items predecessor period incurred 227 million postpetition professional fees associated bankruptcy cases additionally incurred noncash charges 206 billion freshstart accounting adjustments offset 163 billion noncash gain settlement lstc income tax expense 2016 successor period predecessor period loss income taxes resulting negative tax rates income taxes generally dependent upon results operations local income taxes jurisdictions operate decreases taxes successor period predecessor period 2016 primarily due decreases income taxes due nonoperational status majority rigs 2016 jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt reorganization expenses 2015 compared 2014 following table analysis predecessor operating results years ended december 31 2015 2014 revenue total revenue year ended december 31 2015 decreased 13 compared year ended december 31 2014 contract drilling revenue decreased 10 year ended december 31 2015 compared period 2014 decrease contract drilling revenue primarily due following approximately 589 million due reduced utilization jackups drillships b approximately 398 million due reduced dayrates jackup fleet partially offset approximately 182 million due increased effective dayrates drillships management fees reimbursable revenues decreased approximately 65 30 respectively primarily due decrease management business completed operations management contract two jackups mexico prior year jackup utilization year ended december 31 2015 decreased approximately 23 compared prior year due idle time contracts aquamarine driller deepwater utilization year ended december 31 2015 decreased approximately 2 compared prior year due primarily early termination titanium explorer contract customer september 2015 operating costs operating costs year ended december 31 2015 decreased 11 compared year ended december 31 2014 due primarily following approximately 156 million due reduced costs following early termination titanium explorer contract customer september 2015 b approximately 109 million due reduced costs aquamarine driller idle time contracts 2015 c approximately 102 million due reduced operations support costs resulting cost savings initiatives general administrative expenses general administrative expenses year ended december 31 2015 consistent year ended december 31 2014 increases legal professional fees 16 million primarily related financing restructuring activities offset decreases labor costs depreciation expense depreciation expense year ended december 31 2015 consistent year ended december 31 2014 interest expense financing charges interest expense financing charges year ended december 31 2015 decreased fiscal year 2014 primarily due lower debt outstanding suspension interest debt subsequent chapter 11 filing gain extinguishment debt year ended december 31 2015 repurchased open market discount face value 318 million prebankruptcy senior notes 75 million prebankruptcy term loan recognized gains 93 million 16 million respectively including writeoff deferred financing costs 564000 year ended december 31 2014 repurchased open market discount face value 474 million 314 million two series prebankruptcy notes recognized gains 27 million 40 million respectively gains partially offset writeoff deferred financing costs 12 million reorganization items filing bankruptcy petition december 3 2015 incurred 22 million postpetition professional fees associated bankruptcy cases additionally incurred noncash charges 314 million 57 million writeoff unamortized debt issuance costs debt discounts respectively associated indebtedness expected allowed claims bankruptcy income tax expense tax expense year ended december 31 2015 remained unchanged year ended december 31 2014 even though revenue decreased decreases revenue occurred lower taxing jurisdictions net income attributable noncontrolling interests net income attributable noncontrolling interests year ended december 31 2015 includes 45 million income tax benefit related audit settlement liquidity capital resources december 31 2016 working capital approximately 2556 million including approximately 2317 million cash available general corporate purposes additionally posted 32 million cash collateral bid tenders performance bonds scheduled principal debt maturities interest payments december 31 2018 approximately 394 million anticipate expenditures december 31 2018 sustaining capital expenditures rig fleet capital spares information technology general corporate projects approximately 92 million 113 million currently warm stacked rigs obtain new contracts could incur reactivation mobilization costs rigs well customer requested equipment upgrades costs could significant may recoverable customer additionally anticipate expenditures maintenance repairs equipment certifications warm stacked rigs preparation future contracts 2017 anticipate fleet reactivation costs including reactivation expenditures special periodic surveys major repair maintenance expenditures inventory replenishment preparedness costs warm stacked rigs approximately 159 million 195 million february 2017 executed purchase sale agreement third party acquire jack rig related drilling contract 130 million payment 13 million made upon execution agreement remaining 117 million due closing targeted first quarter 2017 expect fund expenditures available working capital cash flow operations currently 246 million available issuance letters credit revolving letter credit facility table includes summary cash flow information periods indicated changes cash flows operating activities successor period driven changes net income see discussion changes net income “results operations” significant collections customers period changes cash flows used investing activities dependent upon level capital expenditures varies based timing projects cash used capital expenditures approximately 120 million successor period three drilling units operated period successor period made scheduled maturity payments postbankruptcy debt totaling 15 million predecessor period january 1 2016 february 10 2016 received proceeds 739 million net debt issuance costs 23 million issuance 10 second lien notes additionally made 70 million payment prepetition credit agreement significant elements postpetition debt described “note 5 debt” consolidated financial statements included elsewhere report enter operating leases normal course business office space housing vehicles specified operating equipment leases contain options would cause future cash payments change exercised options contractual obligations table set forth contractual obligations december 31 2016 figures included table based estimates assumptions obligations including duration factors contractual obligations may actually pay future periods may vary reflected table estimates assumptions subjective 1 amount represents december 31 2030 maturity value including pik interest convertible notes 2 interest 2016 term loan facility payable libor plus 65 libor floor 05 december 31 2016 interest rate 7498 rate used calculate interest payments maturity date december 31 2019 3 amounts represent lease payments existing operating leases enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases 4 amounts consist obligations external vendors primarily related materials spare parts consumables related supplies drilling rigs commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims believe ultimate resolution existing litigation claims disputes material adverse effect financial position results operations cash flows july 2015 became aware hamylton padilha brazilian agent vdc used contracting titanium explorer drillship petrobras entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives mr hsinchi su time alleged bribery scheme member board directors significant shareholder former parent company vdc learned mr padilha’s plea agreement allegations voluntarily contacted doj sec advise developments well fact engaged outside counsel conduct internal investigation allegations internal investigation ongoing cooperating doj sec investigation allegations connection cooperation doj sec advised agencies early 2010 engaged outside counsel investigate report allegations improper payments customs immigration officials asia investigation concluded 2011 determined time disclosure warranted however abundance caution reviewing matter light allegations petrobras matter although cannot predict outcome matter doj sec determine violations fcpa occurred company could subject civil criminal sanctions including monetary penalties well additional requirements changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payable pursuant terms restructuring agreement company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries continue believe position regarding settlement amounts correct cannot predict ultimate outcome matter legal proceedings parties transpire critical accounting estimates preparation financial statements related disclosures accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period management believes current estimates appropriate reasonable actual results could materially differ estimates identified policies critical business operations understanding financial operations freshstart accounting effective bankruptcy filing december 3 2015 subject requirements asc 852 expenses realized gains losses provisions losses directly associated bankruptcy proceedings classified “reorganization items” consolidated statements operations certain prepetition liabilities subject chapter 11 proceedings considered lstc petition date prior emergence bankruptcy effective date lstc classification distinguished liabilities expected compromised liabilities incurred postpetition upon emergence bankruptcy adopted freshstart accounting resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated balance sheet december 31 2016 related adjustments thereto recorded consolidated statement operations reorganization items predecessor period january 1 february 10 2016 property equipment longlived assets primarily consisting values drilling rigs significant amount total assets make judgments regard carrying value assets including amounts capitalized componentization depreciation amortization methods estimated useful lives drilling rigs depreciated component basis estimated useful lives straightline basis date placed service assets depreciated upon placement service estimated useful lives straightline basis evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy february 10 2016 adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value projections assumptions used valuation changed significantly yearend accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable revenue recognized services performed based contracted dayrates number operating days period connection customer contract may receive lumpsum fees mobilization equipment personnel mobilization fees costs incurred mobilize rig one geographic market another deferred recognized straightline basis term contract excluding option periods costs incurred mobilize rig without contract expensed incurred fees lumpsum payments received capital improvements rigs deferred amortized income term related drilling contract costs capital improvements capitalized depreciated useful lives assets revenue deferred drilling contracts totaled 00 million 202 million december 31 2016 2015 respectively deferred revenue included either accrued liabilities longterm liabilities consolidated balance sheet based upon initial term related drilling contract rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense recent accounting standards see “note 2 basis presentation significant accounting policies” consolidated financial statements included elsewhere report item 7aitem 7 management’s discussion analysis financial condition results operations following discussion intended assist understanding financial position results operations years ended december 31 2019 2018 2017 following discussion read conjunction information contained “item 1 business” “item 1a risk factors” part annual report “item 8 financial statements supplementary data” part ii annual report certain previously reported amounts reclassified conform current year presentation overview international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused international markets additionally drilling units owned others provide construction supervision services rigs construction preservation management services rigs stacked operations marketing services operating rigs following table sets forth certain information concerning offshore drilling fleet february 24 2020 1 soehanah recently completed bareboat charter affiliate pt apexindo pratama duta tbk currently preparing drilling operations indonesia 2 drillships designed drill 12000 feet water platinum explorer titanium explorer tungsten explorer currently equipped drill 10000 feet water business outlook expectations future oil natural gas prices historically key driver demand services international energy agency march 2020 oil market report expects demand fall yearonyear 90 thousand barrels per day first time since 2009 although oil prices partially rebounded historical lows experienced early 2016 reaching highs near 80 per barrel early october 2018 oil prices continue fluctuate ending 2019 near 70 per barrel oil prices currently trading 40 per barrel largely response concerns coronavirus potential impact worldwide demand oil result price volatility uncertainty future operators generally continue display cautious approach offshore capital expenditures addition reduction demand drilling rigs additional supply newbuild rigs depressing market according bassoe currently 49 jackups 26 deepwaterharsh environment floaters order shipyards scheduled deliveries extending july 2022 unclear drilling rigs actually delivered many rig deliveries already deferred later dates rig orders canceled response oversupply drilling rigs number competitors removing older less efficient rigs fleets either cold stacking drilling rigs taking permanently service furthermore according bassoe 242 rigs removed drilling fleet since oil price decline 2014 242 rigs 130 floaters semisubmersibles drillships 112 jackups believe rig recycling important element bringing supply drilling rigs back alignment demand anticipate sufficient materially improve market conditions 2020 response market conditions excessive levels idle capacity intense pressure operating dayrates drilling contractors generally prefer maintain rigs active state customers generally favor recently operating rigs reactivated coldstacked rigs therefore opportunities services increased past year albeit slow rate market gradually absorbs oversupply active warm drilling rigs increases dayrates evident jackup sector pricing improvement slowly observed floater sector however expect continued market volatility international tensions prices supply present challenges industry near term following table reflects summary contract drilling backlog coverage days contracted related revenue december 31 2019 forward based information available time results operations operating results contract drilling services dependent three primary metrics available days rig utilization dayrates following table sets forth selected operational information periods indicated 1 available days total number rig calendar days period rigs excluded bareboat charter contracts removed upon classification held sale longer eligible earn revenue 2 utilization calculated percentage actual number revenue earning days divided available days period revenue earning day defined day rig earns dayrate commencement operations 3 average daily revenues based contract drilling revenues divided revenue earning days average daily revenue differ average contract dayrate due billing adjustments nonproductive time mobilization fees demobilization fees years ended december 31 2019 2018 net income current year 4557 million 8027 per basic share operating revenues 7608 million compared net loss comparable year 1415 million 2829 per basic share operating revenues 2257 million following table analysis operating results year ended december 31 2019 2018 revenue total revenue increased 5351 million due primarily 5940 million revenue received petrobras parties current year result termination titanium explorer contract please refer “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 contract drilling revenue decreased 29 current year compared comparable year due primarily lower utilization tungsten explorer completion operations west africa october 2018 resulting 689 million lower revenue completing required equipment recertifications certain upgrades tungsten explorer recommenced operations egypt may 2019 decrease partially offset higher utilization topaz driller higher revenue efficiency platinum explorer current year contributed incremental 35 million 55 million respectively contract drilling revenue current year operating costs operating costs current year decreased 8 compared comparable year deepwater operating costs current year decreased 95 million due primarily lower costs tungsten explorer operated 150 fewer days current year jackup operating costs current year decreased 41 million due primarily completion noncash amortization vantage 260 contract value april 2019 current year comparable year included 16 million 63 million respectively noncash amortization contract value higher jackup operating costs comparable year offset gain disposal vantage 260 amount 29 million general administrative expenses increases general administrative expenses current year compared comparable year primarily due 1023 million increase expenses associated nonroutine matters including among others 634 million remaining contingency legal fee related collection petrobras award 305 million increase insurance costs judgment preservation insurance insure contingency required return petrobras payment general administrative expenses current year comparable year included approximately 06 million 52 million respectively noncash sharebased compensation expense decrease noncash sharebased compensation expense offset increase cash compensation expense 56 million cash awards granted certain key employees company pursuant underlying award agreements issued amended 2016 mip depreciation expense depreciation expense current year increased 5 compared comparable year due primarily acquisition soehanah december 31 2018 interest income interest income current year increased 1145 million compared comparable year due primarily interest derived petrobras payments received current year please refer “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 interest expense financing charges interest expense current year decreased 41 compared comparable year primarily due decreased discount accretion convertible notes fully amortized february 2019 interest expense included noncash discount accretion pik interest deferred financing costs totaling approximately 141 million 576 million current year comparable year respectively loss debt extinguishment november 2018 paid approximately 03 million prepayment interest penalties wrote approximately 10 million deferred financing costs connection early redemption outstanding 10 second lien notes net functional currency usd however portion revenues earned expenses incurred certain subsidiaries denominated currencies usd transactions remeasured usd based combination current historical exchange rates net foreign currency exchange gain 02 million net foreign currency exchange loss 15 million included net current year comparable year respectively income tax provision income tax expense decreased current year compared comparable year mainly due change jurisdiction operations tax benefits realized certain jurisdictions income taxes generally dependent upon results operations local income taxes jurisdictions operate jurisdictions pay taxes receive benefits certain income expense items including interest expense disposal gains losses jurisdictions recognize income taxes net income basis deemed profit basis operations usually carried taxable jurisdictions impact income tax provision years ended december 31 2018 2017 comparison results operations fiscal years ended december 31 2018 2017 see “part ii item 7 management’s discussion analysis financial condition results operations” annual report form 10k fiscal year ended december 31 2018 filed sec march 14 2019 liquidity capital resources december 31 2019 working capital approximately 2693 million including approximately 2319 million cash available general corporate purposes scheduled interest payments december 31 2020 approximately 324 million scheduled principal debt maturities 2023 anticipate capital expenditures december 31 2020 approximately 70 million approximately 95 million sustaining capital spares rigs obtain new contracts could incur reactivation mobilization costs rigs well customer requested equipment upgrades costs could significant may fully recoverable customer additionally december 31 2020 anticipate incremental expenditures special periodic surveys major repair maintenance expenditures equipment recertifications approximately 260 million approximately 320 million december 31 2019 399 million available issuance letters credit cash collateralized letter credit facility june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award please refer “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information regarding petrobras agreement petrobras award information discussed therein incorporated reference entirety part ii item 7 table includes summary cash flow information periods indicated changes cash flows operating activities driven changes net income see discussion changes net income “results operations” part ii item 7 cash flows used investing activities current year primarily capital expenditures mpd system cash flows used financing activities current year primarily special cash distribution paid shareholders record close business december 10 2019 see “note 7 shareholders’ equity deficit” “notes consolidated financial statements” part ii item 8 annual report information comparison cash flows fiscal years ended december 31 2018 2017 see “part ii item 7 management’s discussion analysis financial condition results operations” annual report form 10k fiscal year ended december 31 2018 filed sec march 14 2019 significant elements 925 first lien notes described “note 6 debt” “notes consolidated financial statements” part ii item 8 annual report enter operating leases normal course business office space housing vehicles specified operating equipment leases contain options would cause future cash payments change exercised options contractual obligations table set forth contractual obligations december 31 2019 figures included table based estimates assumptions obligations including duration factors contractual obligations may actually pay future periods may vary reflected table estimates assumptions subjective 1 interest 925 first lien notes payable 925 may november year maturity date november 15 2023 2 amounts represent lease payments existing operating leases enter operating leases normal course business contain renewal options future cash payments would change exercised renewal options enter additional operating leases 3 amounts consist obligations external vendors primarily related capital expenditures materials spare parts consumables related supplies drilling rigs november 30 2018 issued 3500 million aggregate principal amount 925 first lien notes private placement par proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement governing facility ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection purchase soehanah jack rig iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes 925 first lien notes guaranteed joint several basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes registered securities act state securities laws concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized december 31 2019 399 million available issuance letters credit cash collateralized letter credit facility commitments contingencies subject litigation claims disputes ordinary course business may covered insurance information regarding legal proceedings set forth “note 9 commitments contingencies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 inherent risk litigation dispute assurance given outcome claims believe ultimate resolution existing litigation claims disputes material adverse effect financial position results operations cash flows critical accounting estimates preparation financial statements related disclosures accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period significant accounting policies included “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” part ii item 8 annual report management believes current estimates appropriate reasonable actual results could materially differ estimates identified policies critical business operations understanding financial operations property equipment longlived assets primarily consisting values drilling rigs significant amount total assets make judgments regard carrying value assets including amounts capitalized componentization depreciation amortization methods salvage values estimated useful lives drilling rigs depreciated component basis estimated useful lives straightline basis date placed service assets depreciated upon placement service estimated useful lives straightline basis evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy effective date adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value december 31 2019 triggering event occurred indicate current carrying value drilling rigs may recoverable income taxes vdi cayman islands corporation cayman islands impose corporate income taxes consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes operate multiple countries different legal forms result subject jurisdiction numerous domestic foreign tax authorities well tax agreements treaties among governments tax rates vary jurisdictions tax base rates applied taxes may levied based net profit taxes gross revenues withholding taxes revenue determination income tax expense jurisdiction requires interpretation related tax laws regulations use estimates assumptions regarding significant future events amount timing character deductions permissible revenue recognition methods tax law sources character income tax credits recognize interest penalties related income taxes component income tax expense income tax expense may vary substantially one period another result changes tax laws regulations agreements treaties foreign currency exchange restrictions fluctuations rig movements level operations profitability tax jurisdiction furthermore income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation net operating results income tax expense furthermore jurisdictions pay taxes pay taxes low rates receive benefits certain income expense items including interest expense loss extinguishment debt gains losses disposal transfer assets reorganization expenses writeoff development costs certain jurisdictions taxed preferential tax regimes may require compliance specified requirements sustain tax benefits believe compliance specified requirements continue make reasonable efforts comply however ability satisfy requirements preferential tax regimes may affected changes laws business operations factors affecting company establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities future distribution made unremitted earnings foreign subsidiaries may required record additional taxes certain jurisdictions however practical time estimate unremitted earnings potential tax liability due complexity hypothetical calculations deferred income tax assets liabilities recorded expected future tax consequences events recognized financial statements tax returns provide deferred taxes temporary differences financial statements tax bases assets liabilities using enacted tax rates expected apply taxable income temporary differences expected reverse deferred tax assets also provided certain loss tax credit carryforwards valuation allowance established reduce deferred tax assets likely portion deferred tax asset realized change accounting lease arrangements adoption asc topic 842 adopted asc topic 842 leases amended january 1 2019 electing apply standard prospectively restating comparative periods please refer “note 2 basis presentation significant accounting policies” “note 5 leases” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 recent accounting standards see “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” part ii item 8 annual report information discussed therein incorporated reference entirety part ii item 7 item 7a item 7a quantitative qualitative disclosures market risk rigs operate various international markets thus sometimes subject foreign exchange risk may time also exposed certain commodity price risk equity price risk risks related market driven rates prices risks associated foreign exchange rates significant 2015 drilling contracts primarily denominated us dollars enter derivatives financial instruments trading speculative purposes interest rate risk december 31 2015 variable rate debt classified liabilities subject compromise result december 3 2015 bankruptcy filing variable rate debt retired february 10 2016 issuing note holders new shares convertible notes reorganized company foreign currency exchange rate risk operate international areas exposed foreign exchange risk primary foreign exchange risk management strategy involves structuring customer contracts provide payment us dollars functional currency local currency payment portion denominated local currency based anticipated local currency requirements contract term due various factors including customer acceptance local banking laws statutory requirements local currency convertibility impact inflation local costs actual foreign exchange needs may vary anticipated customer contracts resulting partial exposure foreign exchange risk fluctuations foreign currencies material impact overall results find situations payments local currency equal local currency requirements foreign exchange derivative instruments specifically foreign exchange forward contracts spot purchases may used mitigate foreign currency risk foreign exchange forward contract obligates us exchange predetermined amounts specified foreign currencies specified exchange rates specified dates make equivalent us dollar payment equal value exchange enter derivative transactions speculative purposes december 31 2015 open foreign exchange derivative contracts material foreign currency exposure risk item 8item 7a quantitative qualitative disclosures market risk rigs operate various international locations thus sometimes subject foreign exchange risk may time also exposed certain commodity price risk equity price risk risks related market driven rates prices enter derivatives financial instruments trading speculative purposes significant decline worldwide exploration production spending result persistence reduced oil prices since 2014 negatively impacted offshore contract drilling business discussed “item 7management’s discussion analysis financial condition results operations” interest rate risk december 31 2017 approximately 1401 million face amount variable rate debt outstanding 2016 term loan facility 2016 term loan facility interest payable unpaid principal amount term loan libor plus 65 libor floor 05 december 31 2017 1month libor rate 1569 current interest rate 2016 term loan facility 8069 increases libor rate would impact amount interest required pay borrowings every 1 increase libor floor would subject increase interest expense 14 million per annum based principal amounts outstanding december 31 2017 entered interest rate hedges swaps regard 2016 term loan facility foreign currency exchange rate risk functional currency us dollar consistent oil gas industry however outside united states portion expenses incurred local currencies therefore us dollar weakens strengthens relation currencies countries operate expenses reported us dollars increase decrease substantial majority revenues received us dollars functional currency however certain countries operate local laws contracts may require us receive payment local currency exposed foreign currency exchange risk extent amount monetary assets denominated foreign currency differs obligations foreign currency order mitigate effect exchange rate risk attempt limit foreign currency holdings extent needed pay liabilities local currency manage exposure fluctuations currency exchange rates foreign exchange derivative instruments specifically foreign exchange forward contracts spot purchases may used foreign exchange forward contract obligates us exchange predetermined amounts specified foreign currencies specified exchange rates specified dates make equivalent us dollar payment equal value exchange enter derivative transactions speculative purposes december 31 2017 open foreign exchange derivative contracts material foreign currency exposure risk item 8item 7a quantitative qualitative disclosures market risk rigs operate various international locations thus sometimes subject foreign exchange risk may time also exposed certain commodity price risk equity price risk risks related market driven rates prices enter derivatives financial instruments trading speculative purposes significant decline worldwide exploration production spending result reduced oil prices since 2014 negatively impacted offshore contract drilling business discussed “item 7management’s discussion analysis financial condition results operations” interest rate risk december 31 2018 variable rate debt outstanding foreign currency exchange rate risk functional currency us dollar consistent oil gas industry however outside united states portion expenses incurred local currencies therefore us dollar weakens strengthens relation currencies countries operate expenses reported us dollars increase decrease substantial majority revenues received us dollars functional currency however certain countries operate local laws contracts may require us receive payment local currency exposed foreign currency exchange risk extent amount monetary assets denominated foreign currency differs obligations foreign currency order mitigate effect exchange rate risk attempt limit foreign currency holdings extent needed pay liabilities local currency manage exposure fluctuations currency exchange rates foreign exchange derivative instruments specifically foreign exchange forward contracts spot purchases may used foreign exchange forward contract obligates us exchange predetermined amounts specified foreign currencies specified exchange rates specified dates make equivalent us dollar payment equal value exchange enter derivative transactions speculative purposes december 31 2018 open foreign exchange derivative contracts material foreign currency exposure risk item 8item 7a quantitative qualitative disclosures market risk rigs operate various international locations thus sometimes subject foreign exchange risk may time also exposed certain commodity price risk equity price risk risks related market driven rates prices enter derivatives financial instruments trading speculative purposes significant decline worldwide exploration production spending result reduced oil prices since 2014 negatively impacted offshore contract drilling business discussed “item 7 management’s discussion analysis financial condition results operations” interest rate risk december 31 2020 variable rate debt outstanding foreign currency exchange rate risk functional currency usd consistent oil gas industry however outside united states portion expenses incurred local currencies therefore usd weakens strengthens relation currencies countries operate expenses reported usd increase decrease substantial majority revenues received usd functional currency however certain countries operate local laws contracts may require us receive payment local currency exposed foreign currency exchange risk extent amount monetary assets denominated foreign currency differs obligations foreign currency order mitigate effect exchange rate risk attempt limit foreign currency holdings extent needed pay liabilities local currency manage exposure fluctuations currency exchange rates foreign exchange derivative instruments specifically foreign exchange forward contracts spot purchases may used foreign exchange forward contract obligates us exchange predetermined amounts specified foreign currencies specified exchange rates specified dates make equivalent usd payment equal value exchange enter derivative transactions speculative purposes december 31 2020 open foreign exchange derivative contracts material foreign currency exposure risk item 8item 7a quantitative qualitative disclosures market risk rigs operate various international locations thus sometimes subject foreign exchange risk may time also exposed certain commodity price risk equity price risk risks related market driven rates prices enter derivatives financial instruments trading speculative purposes significant decline worldwide exploration production spending result decline oil prices negatively impacted offshore contract drilling business discussed “item 7management’s discussion analysis financial condition results operations” interest rate risk december 31 2016 approximately 1416 million face amount variable rate debt outstanding 2016 term loan facility 2016 term loan facility interest payable unpaid principal amount term loan libor plus 65 libor floor 05 december 31 2016 3month libor rate 0998 current interest rate 2016 term loan facility 7498 increases libor rate would impact amount interest required pay borrowings every 1 increase libor floor would subject increase interest expense 14 million per annum based december 31 2016 outstanding principal amounts entered interest rate hedges swaps regard 2016 term loan facility foreign currency exchange rate risk operate international areas exposed foreign exchange risk risks associated foreign exchange rates significant twelve months 2016 drilling contracts denominated us dollars primary foreign exchange risk management strategy involves structuring customer contracts provide payment necessary us dollars functional currency local currency payment portion denominated local currency based anticipated local currency requirements contract term additionally due local statutory banking laws could forced receive us dollar portion drilling contract local currency due various factors including customer acceptance local banking laws statutory requirements local currency convertibility impact inflation local costs actual foreign exchange needs could vary anticipated customer contracts resulting partial exposure foreign exchange risk situations occur payments local currency equal local currency requirements foreign exchange derivative instruments specifically foreign exchange forward contracts spot purchases may used mitigate foreign currency risk foreign exchange forward contract obligates us exchange predetermined amounts specified foreign currencies specified exchange rates specified dates make equivalent us dollar payment equal value exchange enter derivative transactions speculative purposes december 31 2016 open foreign exchange derivative contracts material foreign currency exposure risk item 8item 7a quantitative qualitative disclosures market risk rigs operate various international locations thus sometimes subject foreign exchange risk may time also exposed certain commodity price risk equity price risk risks related market driven rates prices enter derivatives financial instruments trading speculative purposes significant decline worldwide exploration production spending result reduced oil prices since 2014 negatively impacted offshore contract drilling business discussed “item 7 management’s discussion analysis financial condition results operations” interest rate risk december 31 2019 variable rate debt outstanding foreign currency exchange rate risk functional currency usd consistent oil gas industry however outside united states portion expenses incurred local currencies therefore usd weakens strengthens relation currencies countries operate expenses reported usd increase decrease substantial majority revenues received usd functional currency however certain countries operate local laws contracts may require us receive payment local currency exposed foreign currency exchange risk extent amount monetary assets denominated foreign currency differs obligations foreign currency order mitigate effect exchange rate risk attempt limit foreign currency holdings extent needed pay liabilities local currency manage exposure fluctuations currency exchange rates foreign exchange derivative instruments specifically foreign exchange forward contracts spot purchases may used foreign exchange forward contract obligates us exchange predetermined amounts specified foreign currencies specified exchange rates specified dates make equivalent usd payment equal value exchange enter derivative transactions speculative purposes december 31 2019 open foreign exchange derivative contracts material foreign currency exposure risk item 8 item 8 financial statements supplementary data report independent registered public accounting firm board directors vantage drilling international audited accompanying consolidated balance sheet vantage drilling international formerly known offshore group investment limited debtorinpossession subsidiaries “company” december 31 2015 2014 related consolidated statements operations shareholder’s equity cash flows years ended consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement company required engaged perform audit internal control financial reporting audits included consideration internal control financial reporting basis designing audit procedures appropriate circumstances purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audit also includes examining test basis evidence supporting amounts disclosures financial statements assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion discussed note 1 consolidated financial statements december 3 2015 company filed prepackaged plan reorganization chapter 11 us bankruptcy code company emerged bankruptcy february 10 2016 opinion consolidated financial statements referred present fairly material respects financial position vantage drilling international subsidiaries december 31 2015 2014 results operations cash flows years ended conformity accounting principles generally accepted united states america bdo usa llp houston texas march 30 2016 vantage drilling international formerly known offshore group investment limited debtorinpossession consolidated balance sheet thousands december 31 2015 vantage drilling international together subsidiaries debtor possession chapter 11 title 11 united states bankruptcy code periods presented vantage drilling international whollyowned subsidiary vantage drilling company see note 1 accompanying notes integral part consolidated financial statements vantage drilling international formerly known offshore group investment limited debtorinpossession consolidated statement operations thousands december 31 2015 vantage drilling international together subsidiaries debtor possession chapter 11 title 11 united states bankruptcy code periods presented vantage drilling international whollyowned subsidiary vantage drilling company see note 1 accompanying notes integral part consolidated financial statements vantage drilling international formerly known offshore group investment limited debtorinpossession consolidated statement shareholder’s equity thousands except share amounts december 31 2015 vantage drilling international together subsidiaries debtor possession chapter 11 title 11 united states bankruptcy code periods presented vantage drilling international whollyowned subsidiary vantage drilling company see note 1 accompanying notes integral part consolidated financial statements vantage drilling international formerly known offshore group investment limited debtorinpossession consolidated statement cash flows thousands december 31 2015 vantage drilling international together subsidiaries debtor possession chapter 11 title 11 united states bankruptcy code periods presented vantage drilling international whollyowned subsidiary vantage drilling company see note 1 accompanying notes integral part consolidated financial statements vantage drilling international debtorinpossession notes consolidated financial statements 1 organization recent events vantage drilling international “company” “vdi” cayman islands exempted company international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers also provide construction supervision services drilling units owned others fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused primarily international markets company previously known offshore group investment limited changed corporate name vantage drilling international effective february 11 2016 restructuring agreement bankruptcy proceedings chapter 11 december 1 2015 vantage drilling company “vdc” entered restructuring support agreement “restructuring agreement” majority secured creditors pursuant terms restructuring agreement company agreed pursue prepackaged plan reorganization “reorganization plan” chapter 11 title 11 united states bankruptcy code vdc would commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange 615 million promissory note “vdc note” transaction involved reorganization entities common control reflected accompanying consolidated financial statements carryover basis retrospective basis december 3 2015 company certain subsidiaries certain vdc subsidiaries guarantors company’s prebankruptcy secured debt filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 district court delaware confirmed company’s prepackaged reorganization plan company emerged bankruptcy effective february 10 2016 significant elements reorganization plan included second amended restated credit agreement company entered amended restated credit agreement “credit agreement” providing 320 million revolving letter credit facility replace company’s existing 320 million revolving letter credit commitment prepetition credit facility ii 1430 million term loans claims lenders company’s prepetition credit facility converted lenders company’s prepetition credit facility also received 70 million cash reorganization planthe obligations credit agreement guaranteed substantially company’s subsidiaries subject limited exceptions secured first priority basis substantially company’s guarantors’ assets including ship mortgages vessels assignments related earnings insurance pledges capital stock guarantors case subject certain exceptions maturity date term loans commitments established credit agreement december 31 2019 interest payable unpaid principal amount term loan credit agreement libor plus 65 libor floor 10 initial term loans currently bearing interest 75 fees payable outstanding face amount letters credit rate per annum equal 550 rate may increased time pursuant terms credit agreement credit agreement includes customary representations warranties mandatory prepayments affirmative negative covenants events default including covenants among things restrict granting liens incurrence indebtedness making investments capital expenditures sale conveyance assets including vessels transactions affiliates prepayments certain debt operation vessels credit agreement also requires company maintain certain levels available cash defined include unrestricted cash equivalents plus undrawn commitments 10 senior secured second lien notes company engaged rights offering 750 million new 10 senior secured second lien notes due 2020 “10 second lien notes” certain holders secured debt claims connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes raising approximately 739 million deducting cash portion backstop premium vantage drilling international debtorinpossession notes consolidated financial statementscontinued 10 second lien notes issued par fully unconditionally guaranteed senior secured basis certain subsidiaries company 10 second lien notes mature december 31 2020 bear interest date issuance rate 10 per year interest outstanding 10 second lien notes payable semiannually arrears commencing june 30 2016 interest computed basis 360day year comprised twelve 30day months second lien indenture includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial report 112 stepup senior secured third lien convertible notes company issued 4344959 new ordinary shares reorganized company “new shares” 7500 million 112 stepup senior secured third lien convertible notes due december 31 2030 “convertible notes” certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes may traded together separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms third liin indenture 9560 issue date third lien indenture includes customary covenants restrict granting liens customary events default including among things failure issue securities upon conversion convertible notes interest third lien notes payable semiannually arrears commencing june 30 2016 payment kind either increase outstanding principal amount third lien notes company unable increase principal amount issuance additional third lien notes interest computed basis 360day year comprised twelve 30day months rate 1 per annum first four years increasing 12 per annum maturity conversion principal balance convertible notes including payment kind interest thereon convertible new shares conversion rate based initial price per share 9560 per new ordinary share subject adjustment described third lien indenture convertible notes convertible prior third anniversary issue date february 10 2016 upon instruction holders majority principal amount convertible notes ii upon full final resolution potential investigation claims defined determined good faith board directors company “board” determination shall require affirmative vote supermajority nonmanagement directors b february 10 2019 maturity date december 31 2030 upon approval board approval shall require affirmative vote supermajority nonmanagement directors purposes “supermajority nonmanagement directors” means five affirmative votes nonmanagement directors assuming six nonmanagement directors eligible vote circumstances affirmative vote least 75 nonmanagement directors eligible vote ii “investigation claim” means claim held united states brazilian governmental unit arising related procurement certain agreement provision drilling services dated february 4 2009 petrobras venezuela investments services bv vantage deepwater company amended modified supplemented novated time upon occurrence specified change control events certain losses vessels agreements governing credit agreement 10 second lien notes convertible notes required offer repurchase repay case events losses vessels amount proceeds received event loss outstanding debt agreements prices upon terms set forth applicable agreements addition connection certain asset sales required offer repurchase repay outstanding debt set forth applicable debt agreements vdc note effective company’s emergence bankruptcy vdc’s former equity interest company cancelled immediately following event vdc note converted 655095 new shares accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 620 million reorganization plan allowed company maintain operating assets agreements trade payables credits wages related obligations unimpaired reorganization plan debtorinpossession december 31 2015 operating business debtors possession accordance applicable provisions bankruptcy code bankruptcy court granted motions filed designed primarily minimize impact chapter 11 proceedings operations customers employees result able conduct normal business activities pay associated obligations period following bankruptcy filing paid subject caps applicable payments certain prepetition obligations prepetition employee wages benefits prepetition amounts owed certain vendors vantage drilling international debtorinpossession notes consolidated financial statementscontinued liabilities subject compromise financial statements include amounts classified liabilities subject compromise represent liabilities existed prior effectiveness bankruptcy plans restructured restructuring agreement amounts include amounts related former 2017 term loan “2017 term loan” ii former 2019 term loan “2019 term loan” collectively 2017 term loan “term loans” iii former 75 senior secured first lien notes due 2019 “75 senior notes” iv former 7125 senior secured first lien notes due 2023 “7125 senior notes” v former secured revolving credit agreement “old credit agreement” following table summarizes components liabilities subject compromise included consolidated balance sheet december 31 2015 thousands pursuant terms reorganization plan liabilities subject compromise retired february 10 2016 issuing debtholders securities reorganized company consisting one new share 17261 worth convertible notes new shares convertible notes issued subject terms agreement prohibits new shares convertible notes transferred exchanged separately every 1000 principal note holder received 1722798 new shares 29737 worth convertible notes 2017 term loan 1725087 new shares 29777 worth convertible notes 2019 term loan 1786070 new shares 30829 worth convertible notes 75 senior notes 1728569 new shares 29837 worth convertible notes 7125 senior notes total debtholders received 4344959 new shares reorganization plan reorganization expenses incurred significant expenses costs associated bankruptcy proceedings principally debt issuance costs professional fees amount costs expensed incurred could significantly affect results operations noncash charge writeoff unamortized debt issuance costs associated debt discounts related term loans 75 senior notes 7125 senior notes included reorganization items debt instruments adjusted allowed claim amounts following table summarizes components included reorganization items consolidated statements operations year ended december 31 2015 thousands year ended december 31 2015 cash payments reorganization items totaled 00 million b carrying value debt subject compromise adjusted include related unamortized debt discount debt issuance costs debt adjusted expected amount allowed claims condensed combined debtorinpossession financial information one entities consolidated group bankruptcy one entities consolidated group bankruptcy reporting entity required disclose condensed combined financial statements entities bankruptcy financial statements represent condensed combined financial statements entities filed reorganization plan “vdi debtors” intercompany transactions vdi debtors eliminated financial statements herein vantage drilling international debtorinpossession notes consolidated financial statementscontinued debtors condensed combined balance sheet thousands debtors condensed combined statements operations thousands vantage drilling international debtorinpossession notes consolidated financial statementscontinued debtors condensed combined statement cash flows thousands events july 2015 became aware media reports hamylton padilha brazilian agent company used contracting titanium explorer drillship petroleo brasileiro sa “petrobras” entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives mr su time alleged bribery scheme member board directors significant shareholder predecessor company vantage drilling company learned mr padilha’s plea agreement allegations voluntarily contacted us department justice “doj” us securities exchange commission “sec” advise recent developments well fact engaged outside counsel conduct internal investigation allegations internal investigation ongoing cooperating doj sec investigation allegations although cannot predict outcome matter doj andor sec determine violations us foreign corrupt practices act “fcpa” occurred company could subject civil criminal sanctions including monetary penalties well additional requirements andor changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payable august 31 2015 vdc received notice petrobras america inc “pai” petrobras venezuela investments services bv “pvis” stating pai pvis terminating agreement provision drilling services dated february 4 2009 “drilling contract” drilling contract initially entered pvis vantage deepwater company one whollyowned indirect subsidiaries later novated pvis pai vantage deepwater company vantage deepwater drilling inc another whollyowned indirect subsidiaries notice stated pai pvis terminating drilling contract vantage allegedly breached obligations agreement terms drilling contract initiated arbitration proceedings american arbitration association august 31 2015 challenging pvis pai’s wrongful attempt terminate drilling contract vantage maintained complied obligations drilling contract pvis pai’s attempt terminate agreement improper breach drilling contract ongoing arbitration proceeding parties exchanged initial pleadings confirmed arbitral tribunal vantage asserted claims pai pvis declaratory relief monetary damages based breach contract vantage also asserted claim petroleo brasileiro sa “pbp” enforce guaranty provided pbp petrobras entities pvis pai pbp asserted drilling contract void illegally procured pvis pbp proper parties arbitration pai pvis properly terminated contract pai counterclaimed attorneys’ fees costs alleging vantage failed negotiate good faith commencing arbitration proceedings vantage denies claims defenses asserted petrobras entities merit intends vigorously pursue claims arbitration proceeding connection cancellation contract recognized 215 million deferred mobilization revenue september 2015 vantage drilling international debtorinpossession notes consolidated financial statementscontinued market conditions offshore drilling services driven exploration production spending customers due significant decline oil natural gas prices last year customers dramatically reducing capital spending levels resulted significant decline current market rates drilling services decline utilization offshore drilling rigs amended tungsten explorer contract customer effective january 1 2016 reduce dayrate extend expiration date october 2018 platinum explorer completed initial 5year contract december 2015 currently emerald driller platinum explorer titanium explorer available contract lower utilization levels dayrates combined cancellation titanium explorer contract result company achieving significantly lower income cash flow operations 2016 2 basis presentation significant accounting policies basis consolidation accompanying consolidated financial information december 31 2015 2014 two years ended december 31 2015 prepared accordance generally accepted accounting principles united states america “us gaap” pursuant rules regulations securities exchange commission “sec” include accounts majority owned subsidiaries significant intercompany transactions accounts eliminated certain previously reported amounts reclassified conform current year presentation addition consolidation majority owned subsidiaries also consolidate variable interest entities “vies” determined primary beneficiary determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie certain subsidiaries vdc guarantors prepetition debt part reorganization plan discussed became subsidiaries upon emergence february 10 2016 consolidated entities consolidated financial statements december 31 2015 2014 two years ended december 31 2015 determined vies primary beneficiary following table summarizes net effect consolidating entities consolidated statement operations bankruptcy accounting guidance connection bankruptcy filing december 3 2015 vdi subject requirements asc 852 asc 852 generally change manner financial statements prepared however require financial statements distinguish transactions events directly associated reorganization ongoing operations business revenues expenses realized gains losses provisions losses directly associated reorganization business must reported separately reorganization items consolidated statements operations required distinguish prepetition liabilities subject compromise postpetition liabilities balance sheet liabilities may affected plan reorganization must reported amounts expected allowed bankruptcy court even may settled lesser amounts result plan reorganization connection emergence bankruptcy believe qualify freshstart accounting upon adoption freshstart accounting assets liabilities recorded fair value freshstart reporting date emergence date fair values assets liabilities date may differ materially recorded values assets liabilities reflected historical consolidated financial statements addition adoption freshstart accounting may materially affect results operations following freshstart reporting dates new basis assets liabilities consequently historical financial statements reliable indicators financial condition results operations period adopt freshstart accounting cash equivalents includes deposits financial institutions well shortterm money market instruments maturities three months less purchased vantage drilling international debtorinpossession notes consolidated financial statementscontinued inventory consists materials spare parts consumables related supplies drilling rigs carried lower average cost market property equipment consists drilling rigs furniture fixtures computer equipment capitalized costs computer software drilling rigs depreciated component basis estimated useful lives ranging five thirtyfive years straightline basis date placed service assets depreciated upon placement service estimated useful lives ranging three seven years straightline basis assets sold retired otherwise disposed cost related accumulated depreciation removed accounts gain loss recognized interest costs amortization debt financing costs related financings drilling rigs capitalized part cost construction prior commencement vessel’s first contract capitalize interest years ended december 31 2015 2014 evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would represent excess asset’s carrying value estimated fair value rapid significant decline oil prices coupled steep capital budget cuts exploration production companies significant number newbuild ultradeepwater floaters jackups deliveries scheduled 2016 2017 required us undertake analysis recoverability carrying value drilling rigs december 31 2015 2014 results analysis indicated estimated undiscounted future cash flows exceeded carrying values drilling rigs debt financing costs incurred debt financings deferred amortized term related financing facility straight line basis approximates interest method make open market purchases retire debt discretionary debt payments recognize expense proportionate amount related deferred financing costs 314 million deferred financing costs associated debt subject compromise writtenoff reorganization items accompanying consolidated statement operations revenue recognized services performed based contracted dayrates number operating days period connection customer contract may receive lumpsum fees mobilization equipment personnel demobilization equipment personnel upon completion mobilization fees received costs incurred mobilize rig one geographic market another deferred recognized straightline basis term contract excluding option periods costs incurred mobilize rig without contract expensed incurred fees lumpsum payments received capital improvements rigs deferred amortized income term related drilling contract costs capital improvements capitalized depreciated useful lives assets upon completion drilling contracts demobilization fees received recorded revenue record reimbursements customers rebillable costs expenses revenue related direct costs operating expenses rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense concentrations credit risk financial instruments potentially subject us significant concentration credit risk consist primarily cash equivalents restricted cash accounts receivable maintain deposits federally insured financial institutions excess federally insured limits monitor credit ratings concentration risk financial institutions continuing basis safeguard cash deposits restricted cash invested certificates deposits limited number key customers primarily large international oil gas operators national oil companies international oil gas companies contracts provide monthly billings services performed vantage drilling international debtorinpossession notes consolidated financial statementscontinued monitor compliance contract payment terms ongoing basis outstanding receivables beyond payment terms promptly investigated discussed specific customer allowance doubtful accounts trade receivables december 31 2015 2014 use estimates preparation financial statements accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates fair value financial instruments fair value shortterm financial assets liabilities approximates carrying amounts represented balance sheets principally due shortterm floating rate nature instruments december 31 2015 fair value 7125 senior notes 75 senior notes discussed “note 3 debt” approximately 157 million 235 million respectively based quoted market prices level 1 measurement notes classified liabilities subject compromise december 31 2015 recent accounting standards may 2014 financial accounting standards board “fasb” issued accounting standards update asu 201409 revenue contracts customers asu supersedes existing revenue recognition requirements us gaap including industryspecific guidance asu based principle revenue recognized entity transfers promised goods services customers amount reflects consideration entity expects entitled exchange goods services new standard also requires significant additional disclosures regarding nature amount timing uncertainty revenue cash flows arising contracts customers asu effective annual reporting periods beginning december 15 2017 interim periods within years using either full modified retrospective application approach beginning process evaluating impact pronouncement consolidated financial statements related disclosures august 2014 fasb issued asu 201415 disclosure uncertainties entity’s ability continue going concern “asu 201415” asu 201415 requires management assess entity’s ability continue going concern provide related footnote disclosures certain circumstances standard effective annual periods ending december 15 2016 annual interim reporting periods thereafter early adoption permitted adopt accounting standard december 31 2016 still evaluating provisions asu 201415 assessing impact may consolidated financial statements april 2015 fasb issued asu 201503 interestimputation interest subtopic 83530 simplifying presentation debt issuance costs asu requires debt issuance costs related recognized debt liability presented balance sheet direct deduction carrying amount debt liability consistent debt discounts recognition measurement debt issuance costs affected amendments asu standard effective financial statements issued fiscal years beginning december 15 2015 interim periods within fiscal years early adoption retrospective basis standard permitted financial statements previously issued adopt accounting standard january 1 2016 presentation impact consolidated financial statements july 2015 fasb issued asu 201511 inventory topic 330 simplifying measurement inventory asu changes measurement principle inventory lower cost market “lower cost net realizable value” standard simplifies current guidance entity must measure inventory lower cost market context defined replacement cost ii net realizable value iii net realizable value less approximately normal profit margin net realizable value defined “estimated selling price ordinary course business less reasonably predictable costs completion disposal transportation” guidance effective fiscal years beginning december 15 2016 including interim periods thereafter must applied prospectively date adoption completed review new requirement determine impact guidance financial statements november 2015 fasb issued asu 201517 income taxes topic 740 balance sheet classification deferred taxes requires companies classify deferred tax assets liabilities noncurrent balance sheet instead separating deferred taxes current noncurrent amounts guidance effective fiscal years beginning december 15 2016 including interim periods thereafter early adoption permitted either prospective retrospective application permitted expect new guidance material impact financial statements february 2016 fasb issued asu 201602 leases topic 842 amendments fasb accounting standards codification increase transparency comparability among organizations recognizing lease assets liabilities vantage drilling international debtorinpossession notes consolidated financial statementscontinued balance sheet disclosing key information leasing arrangements amendments lessees required recognize lease assets lease liabilities leases classified operating leases asc 840 guidance effective financial statements issued fiscal years beginning december 15 2018 early adoption permitted beginning process evaluating impact update consolidated financial statements 3 debt bankruptcy filing bankruptcy filing december 3 2015 constituted event default respect prebankruptcy debt obligations result filing prepetition longterm debt related accrued interest included liabilities subject compromise consolidated balance sheet december 31 2015 see “note 1 organization recent events” detail prebankruptcy debt additionally company incurred noncash charge 371 million write unamortized debt discount debt issuance costs related indebtedness subject compromise contractual interest expense represents amounts due contractual terms outstanding debt including debt subject compromise year ended december 31 2015 contractual interest expense 149 million related liabilities subject compromise recorded prebankruptcy debt composed following 1 classified liabilities subject compromise december 31 2015 connection emergence bankruptcy proceedings february 10 2016 prebankruptcy debt discharged reorganization plan see “note 1 organization recent events” additional information prior entering reorganization plan made additional principal payments numerous open market purchases outstanding prebankruptcy debt following table summarizes yearly debt payments scheduled discretionary years ended december 31 2015 2014 thousands 1 discretionary open market debt repurchases 2 includes additional principal payments 75 million 42 million 2015 2014 respectively 3 includes 10 million repayment revolving credit agreement 2014 vantage drilling international debtorinpossession notes consolidated financial statementscontinued connection repurchase 318 million 75 senior notes 75 million 2017 term loan 2015 see table recognized net gains 93 million 16 million respectively related redemption discount debt partially offset writeoff deferred financing costs original issuance discount debt connection repurchases 314 million 75 senior notes repurchases additional principal payment 440 million 2017 term loan 2014 see table recognized gain 36 million loss 11 million respectively related redemption discount debt partially offset writeoff deferred financing costs original issuance discount debt connection repurchases 474 million 7125 senior notes 2014 see table recognized gain 19 million related redemption discount debt partially offset writeoff deferred financing costs debt 4 shareholder’s equity 50000000 authorized ordinary shares par value 0001 per share december 31 2015 1000 ordinary shares issued outstanding december 31 2015 company 100 owned subsidiary vdc equity incentive plans vdc 2007 longterm incentive plan “ltip” timevested performance units awarded officers employees company related share compensation expense recognized outstanding share awards december 31 2015 vest future ltip due vdc’s liquidation filing cayman islands recognized share compensation expense allocated vdc 58 million 79 million years ended december 31 2015 december 31 2014 respectively 5 income taxes cayman islands entity cayman islands impose corporate income taxes domestic earnings foreign consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes operate multiple countries different legal forms result subject jurisdiction numerous domestic foreign tax authorities well tax agreements treaties among governments tax rates vary jurisdictions tax base rates applied taxes may levied based net profit taxes gross revenues withholding taxes revenue determination taxable income jurisdiction requires interpretation related tax laws regulations use estimates assumptions regarding significant future events amount timing character deductions permissible revenue recognition methods tax law sources character income tax credits income tax expense may vary substantially one period another result changes tax laws regulations agreements treaties foreign currency exchange restrictions rig movements level operations profitability tax jurisdiction furthermore income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation operating results income tax expense furthermore jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt writeoff development costs income tax expense benefit relates foreign income taxes consisted following vantage drilling international debtorinpossession notes consolidated financial statementscontinued reconciliation statutory effective income tax rates shown deferred income tax assets liabilities recorded expected future tax consequences events recognized financial statements tax returns provide deferred taxes temporary differences financial statements tax bases assets liabilities using enacted tax rates expected apply taxable income temporary differences expected reverse deferred tax assets also provided certain tax credit carryforwards valuation allowance established reduce deferred tax assets likely portion deferred tax asset realized increase valuation allowance year included taxes foreign earnings rate table related net loss carry forwards generated year believe likely substantially deferred tax asset realized components net deferred tax assets liabilities follows expect changes tax bases effects loss carryforwards result emergence bankruptcy february 10 2016 december 31 2015 foreign tax loss carry forwards approximately 230 million begin expire 2016 include component income tax provision potential interest penalties related recognized tax contingencies within global operations interest penalties expense 01 million included 2015 income tax expense interest penalties 12 million accrued december 31 2015 vantage drilling international debtorinpossession notes consolidated financial statementscontinued reconciliation unrecognized tax benefits amount follows thousands certain jurisdictions taxed preferential tax regimes may require compliance specified requirements sustain tax benefits believe compliance specified requirements continue make reasonable efforts comply however ability meet requirements preferential tax regimes may affected changes laws business operations factors affecting company industry many beyond control periodic tax returns subject examination taxing authorities jurisdictions operate accordance normal statute limitations applicable jurisdiction examinations may result assessments additional taxes resolved authorities courts resolution matters involves uncertainties assurances outcome tax years 2008 forward remain open examination many jurisdictions currently involved several tax examinations jurisdictions operating previously operated information becomes available course examinations may increase decrease estimates tax assessments accruals 6 commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims july 2015 became aware media reports hamylton padilha brazilian agent company used contracting titanium explorer drillship petroleo brasileiro sa “petrobras” entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives mr su time alleged bribery scheme member board directors significant shareholder predecessor company vantage drilling company learned mr padilha’s plea agreement allegations voluntarily contacted us department justice “doj” us securities exchange commission “sec” advise recent developments well fact engaged outside counsel conduct internal investigation allegations internal investigation ongoing cooperating doj sec investigation allegations although cannot predict outcome matter doj andor sec determine violations us foreign corrupt practices act “fcpa” occurred company could subject civil criminal sanctions including monetary penalties well additional requirements andor changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payablewe enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options december 31 2015 obligated leases varying expiration dates office space housing vehicles specified operating equipment future minimum annual rentals operating leases initial remaining terms excess one year 37 million 18 million 15 million 12 million 11 million years ending december 31 2016 2017 2018 2019 2020 respectively 31 million aggregate years 2021 thereafter rental expenses two years ended december 31 2015 2014 approximately 146 million 152 million respectively vantage drilling international debtorinpossession notes consolidated financial statementscontinued december 31 2015 purchase commitments 157 million purchase commitments consist obligations outstanding external vendors primarily related materials spare parts consumables related supplies drilling rigs 7 supplemental financial information prepaid expenses current assets prepaid expenses current assets consisted following property equipment net property equipment net consisted following assets consisted following vantage drilling international debtorinpossession notes consolidated financial statementscontinued accrued liabilities accrued liabilities consisted following longterm liabilities longterm liabilities consisted following transactions related parties companys consolidated statement operations included following transactions related parties periods indicated following table summarizes balances payable related parties included companys consolidated balance sheet periods indicated vantage drilling international debtorinpossession notes consolidated financial statementscontinued 8 business segment information aggregate contract drilling operations one reportable segment even though provide contract drilling services different types rigs including jackup rigs drillships different geographic regions operations dependent global oil gas industry rigs relocated based demand services customer requirements customers consist primarily large international oil gas companies national governmentcontrolled oil gas companies international exploration production companies also provide construction supervision services drilling units owned others september 2013 signed agreement supervise manage construction two ultradeepwater drillships third party receive management fees reimbursable costs construction phase two drillships subject maximum amount drillship business represented approximately 1 16 total revenue years ended december 31 2015 2014 respectively years ended december 31 2015 2014 majority revenue countries outside united states consequently exposed risk changes economic political social conditions inherent foreign operations three customers accounted approximately 32 25 20 consolidated revenue year ended december 31 2015 four customers accounted approximately 24 18 17 14 consolidated revenue year ended december 31 2014 revenues country follows countries represent countries operate individually operating revenues representing less 10 percent total revenues earned property equipment net country follows countries represent countries operate individually property equipment net representing less 10 percent total property equipment substantial portion assets mobile drilling units asset locations end period necessarily indicative geographic distribution revenues generated assets periods item 9item 8 financial statements supplementary data report independent registered public accounting firm board directors vantage drilling international houston texas opinion consolidated financial statements audited accompanying consolidated balance sheets vantage drilling international “company” subsidiaries december 31 2017 2016 successor related consolidated statements operations shareholders’ equity cash flows year ended december 31 2017 periods february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 year ended december 31 2015 predecessor related notes collectively referred “consolidated financial statements” opinion consolidated financial statements present fairly material respects financial position company subsidiaries december 31 2017 2016 successor results operations cash flows year ended december 31 2017 period february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 year ended december 31 2015 predecessor conformity accounting principles generally accepted united states america basis opinion consolidated financial statements responsibility company’s management responsibility express opinion company’s consolidated financial statements based audits public accounting firm registered public company accounting oversight board united states “pcaob” required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud company required engaged perform audit internal control financial reporting part audits required obtain understanding internal control financial reporting purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion emphasis matter discussed note 2 consolidated financial statements upon emerging bankruptcy proceedings february 10 2016 company became new entity financial reporting purposes applied freshstart accounting company’s assets liabilities recorded fair values differed materially previously recorded values result consolidated financial statements periods following application freshstart accounting comparable financial statements previous periods bdo usa llp served companys auditor since 2014 houston texas march 29 2018 vantage drilling international consolidated balance sheet thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement operations thousands except per share data accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement shareholder’s equity thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement cash flows thousands accompanying notes integral part consolidated financial statements vantage drilling international notes consolidated financial statements 1 organization recent events vantage drilling international “company” “vdi” cayman islands exempted company international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused international markets additionally drilling units owned others provide construction supervision services construction preservation management services stacked operations marketing services operating rigs april 5 2017 pursuant purchase sale agreement third party completed purchase class 15444c jackup rig related multiyear drilling contract 130 million payment 13 million made february 2017 upon execution agreement remaining 117 million paid closing rig renamed vantage 260 august 2017 substituted sapphire driller baker marine pacific class 375 jackup rig fulfill drilling contract october 19 2017 entered purchase sale agreement sell vantage 260 transaction closed vantage 260 sold february 26 2018 restructuring agreement emergence voluntary reorganization chapter 11 proceeding december 1 2015 vantage drilling company “vdc” former parent company entered restructuring support agreement “restructuring agreement” majority secured creditors pursuant terms restructuring agreement company agreed pursue prepackaged plan reorganization “reorganization plan” chapter 11 title 11 united states bankruptcy code vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange 615 million promissory note “vdc note” transaction involved reorganization entities common control reflected consolidated financial statements carryover basis retrospective basis effective company’s emergence bankruptcy february 10 2016 “effective date” vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new ordinary shares reorganized company “new shares” accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date december 3 2015 “petition date” company certain subsidiaries certain vdc subsidiaries guarantors company’s prebankruptcy secured debt filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 district court delaware confirmed company’s prepackaged reorganization plan company emerged bankruptcy effective date pursuant terms reorganization plan prebankruptcy term loans senior notes retired effective date issuing debtholders 4344959 units reorganized company “units” unit securities originally consisted one new share 17261 principal company’s 112 stepup senior secured third lien convertible notes due 2030 “convertible notes” subject adjustment upon payment interest kind “pik interest” certain cases redemption conversion convertible notes well share splits share dividends consolidation reclassification new shares new shares convertible notes subject terms agreement prohibits new shares convertible notes traded separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2017 taking account payment pik interest convertible notes date unit consisted one new share 17590 principal convertible notes significant elements reorganization plan included second amended restated credit agreement company’s prepetition credit agreement amended replace 320 million revolving letter credit commitment prepetition facility new 320 million revolving letter credit facility ii repay 150 million outstanding borrowings 70 million cash b issuance 1430 million initial term loans “2016 term loan facility” 10 senior secured second lien notes holders company’s prepetition term loans senior notes claims eligible participate rights offering conducted company 750 million company’s new 10 senior secured second lien notes due 2020 “10 second lien notes” connection rights offering certain creditors entered vantage drilling international notes consolidated financial statementscontinued “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds company 739 million deducting cash portion backstop premium reorganization plan allowed company continue business operations court proceedings maintain operating assets agreements company adequate liquidity prior filing seek debtorinpossession financing trade payables credits wages related obligations unimpaired reorganization plan events since july 2015 company cooperating investigation us department justice “doj” sec arising allegations hamylton padilha brazilian agent vdc used contracting titanium explorer drillship petroleo brasileiro sa “petrobras” mr hsinchi su former member board directors significant shareholder former parent company vdc engaged alleged scheme pay bribes former petrobras executives violation us foreign corrupt practices act “fcpa” august 2017 received letter doj acknowledging full cooperation doj’s investigation closing investigation without action company continued cooperation investigation sec allegations engaged negotiations staff division enforcement sec resolve investigation reached agreement principle staff relating terms proposed offer settlement presented commission approval assurance proposed offer settlement accepted commission company believes proposed resolution become final second quarter 2018 connection proposed offer settlement accrued liability amount 5 million commission accept proposed offer settlement sec determines violations fcpa occurred company could subject civil criminal sanctions including monetary penalties well additional requirements changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements following notice requisite lenders andor noteholders applicable result outstanding debt 2016 term loan facility 10 second lien notes becoming immediately due payable par outstanding debt convertible notes becoming immediately due payable makewhole amount specified indenture governing convertible notes 2 basis presentation significant accounting policies basis consolidation accompanying consolidated financial information december 31 2017 2016 years ended december 31 2017 2015 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 prepared accordance generally accepted accounting principles united states america “us gaap” pursuant rules regulations sec include accounts majority owned subsidiaries variable interest entities “vies” discussed significant intercompany transactions accounts eliminated connection bankruptcy filing subject provisions financial accounting standards board “fasb” accounting standards codification “asc” 852 reorganizations “asc 852” expenses realized gains losses provisions losses directly associated bankruptcy proceedings classified reorganization items consolidated statements operations certain prepetition liabilities subject chapter 11 proceedings considered lstc petition date prior emergence bankruptcy effective date lstc classification distinguished liabilities expected compromised liabilities incurred postpetition asc 852 requires subsequent petition date expenses realized gains losses provisions losses directly associated reorganization business reported separately reorganization items consolidated statements operations required distinguish prepetition liabilities subject compromise postpetition liabilities balance sheet liabilities subject compromise reported amounts expected allowed bankruptcy court even settled lesser amounts result reorganization plan upon emergence bankruptcy effective date adopted freshstart accounting accordance asc 852 resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated financial statements february 10 2016 related adjustments thereto recorded consolidated statements operations reorganization items predecessor period january 1 february 10 2016 result consolidated balance sheets consolidated statement operations subsequent effective date comparable consolidated balance sheets statements operations prior effective date consolidated financial statements related notes presented black line division delineates lack comparability amounts vantage drilling international notes consolidated financial statementscontinued presented february 10 2016 dates prior financial results periods following application freshstart accounting different historical trends differences may material references “successor” relate company subsequent effective date references “predecessor” refer company prior effective date consolidated financial statements successor prepared assuming company continue going concern contemplate realization assets satisfaction liabilities normal course business addition consolidation majority owned subsidiaries also consolidate vies determined primary beneficiary vie determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie certain subsidiaries vdc guarantors prepetition debt part reorganization plan became subsidiaries upon emergence bankruptcy effective date consolidated entities predecessor consolidated financial statements determined vies primary beneficiary following table summarizes net effect consolidating entities predecessor consolidated statement operations cash equivalents includes deposits financial institutions well shortterm money market instruments maturities three months less purchased inventory consists materials spare parts consumables related supplies drilling rigs property equipment consists drilling rigs furniture fixtures computer equipment capitalized costs computer software drilling rigs depreciated component basis estimated useful lives ranging five thirtyfive years straightline basis date placed service assets depreciated upon placement service estimated useful lives ranging three seven years straightline basis assets sold retired otherwise disposed cost related accumulated depreciation removed accounts gain loss recognized evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy february 10 2016 adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value projections assumptions used valuation changed significantly december 31 2017 accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable interest costs amortization debt financing costs related financings drilling rigs capitalized part cost construction prior commencement vessel’s first contract capitalize interest reported periods vantage drilling international notes consolidated financial statementscontinued intangible assets connection acquisition vantage 260 related multiyear drilling contract company recorded identifiable intangible asset 126 million fair value acquired favorable drilling contract resulting intangible asset amortized straightline basis twoyear term drilling contract recognized approximately 47 million amortization expense intangible assets year ended december 31 2017 recognize amortization expense intangible assets period february 10 2016 december 31 2016 period january 1 2016 february 10 2016 expected future intangible asset amortization december 31 2017 follows debt financing costs incurred debt financings deferred amortized term related financing facility straightline basis approximates interest method debt issuance costs related recognized debt liability presented consolidated balance sheet direct deduction carrying amount debt liability revenue recognized services performed based contracted dayrates number operating days period connection customer contract may receive lumpsum fees mobilization equipment personnel demobilization equipment personnel upon completion mobilization fees received costs incurred mobilize rig one geographic market another deferred recognized straightline basis term contract excluding option periods costs incurred mobilize rig without contract expensed incurred fees lumpsum payments received capital improvements rigs deferred amortized income term related drilling contract costs capital improvements capitalized depreciated useful lives assets upon completion drilling contracts demobilization fees received recorded revenue record reimbursements customers rebillable costs expenses revenue related direct costs operating expenses rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable tax deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense concentrations credit risk financial instruments potentially subject us significant concentration credit risk consist primarily cash equivalents restricted cash accounts receivable maintain deposits federally insured financial institutions excess federally insured limits monitor credit ratings concentration risk financial institutions continuing basis safeguard cash deposits limited number key customers primarily large international oil gas operators national oil companies international oil gas companies contracts provide monthly billings services performed monitor compliance contract payment terms ongoing basis outstanding receivables beyond payment terms promptly investigated discussed specific customer allowance doubtful accounts trade receivables december 31 2017 2016 use estimates preparation financial statements accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ongoing basis evaluate estimates including related property equipment income taxes insurance employee benefits contingent liabilities actual results could differ estimates functional currency consider us dollar functional currency operations since majority revenues expenditures denominated us dollars limits exposure currency exchange rate fluctuations recognize currency exchange rate gains losses net year ended december 31 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 year ended december 31 2015 vantage drilling international notes consolidated financial statementscontinued recognized net gain 28 million net gain 11 million net loss 5000 net gain 51 million respectively related currency exchange rates fair value financial instruments fair value shortterm financial assets liabilities approximates carrying amounts represented balance sheet principally due shortterm nature floating rate nature instruments december 31 2017 fair value 2016 term loan facility 10 second lien notes convertible notes approximately 1429 million 746 million 8386 million respectively based quoted market prices less active market level 2 measurement recent accounting standards may 2014 fasb issued asu 201409 revenue contracts customers asu 201409 supersedes existing revenue recognition requirements us gaap including industryspecific guidance asu based principle revenue recognized entity transfers promised goods services customers amount reflects consideration entity expects entitled exchange goods services new standard also requires significant additional disclosures regarding nature amount timing uncertainty revenue cash flows arising contracts customers asu 201409 effective annual reporting periods beginning december 15 2017 interim periods within years using either full modified retrospective application approach adopt new revenue standard effective january 1 2018 using modified retrospective approach recognizing cumulative effect initially applying new standard outstanding contracts increase opening balance retained earnings expect adjustment immaterial applying new standard plan account integrated services provided within drilling contracts single performance obligation composed series distinct time increments satisfied time consideration relate distinct good service mobilization demobilization revenue allocated across single performance obligation recognized series distinct time increments within term contract components consideration within contract including dayrate revenue continue recognized period services performed associated payments relate specifically efforts provide services expect revenue recognition asu 201409 differ current revenue recognition pattern relates demobilization revenue demobilization revenue currently recognized upon completion drilling contract estimated contract commencement recognized term contract new guidance additionally currently expect cumulative effect adjustment opening retained earnings required modified retrospective adoption approach significant primarily consist impact timing difference related recognition demobilization revenue affected contracts one current contracts includes demobilization revenue february 2016 fasb issued asu 201602 leases topic 842 amendments fasb accounting standards codification increase transparency comparability among organizations recognizing lease assets liabilities balance sheet disclosing key information leasing arrangements asu 201602 effective financial statements issued fiscal years beginning december 15 2018 early adoption permitted modified retrospective approach required expect adopt asu 201602 january 1 2019 updated accounting standards concluded drilling contracts contain lease component adoption therefore could require separately recognize revenues associated lease drilling rigs provision contract drilling services adoption asu 201602 ultimate effect consolidated financial statements based evaluation contractspecific facts circumstances effect could result differences timing revenue recognition relative current accounting standards respect leases whereby lessee expect recognize lease liabilities corresponding “right use” assets continuing evaluate requirements regard arrangements either lessor lessee determine effect requirements may consolidated statements financial position operations cash flows disclosures contained notes consolidated financial statements august 2016 fasb issued asu 201615 classification certain cash receipts cash payments addresses classification presentation eight specific cash flow issues currently result diverse practice asu 201615 effective fiscal years beginning december 15 2017 interim periods within fiscal years amendments update applied using retrospective transition method period presented continue evaluate provisions asu 201615 expect standard update significant impact presentation cash receipts cash payments within consolidated statements cash flows october 2016 fasb issued asu 201616 income taxes topic 740 intraentity transfers assets inventory requires entities recognize income tax consequences intraentity transfer asset inventory transaction occurs opposed deferring tax consequences amortizing future periods update effective annual interim periods beginning december 15 2017 modified retrospective approach cumulativeeffect adjustment directly retained earnings beginning period adoption required completed evaluation asu 201616 determined impact financial statements related disclosures vantage drilling international notes consolidated financial statementscontinued january 2017 fasb issued asu 201701 business combinations topic 805 clarifying definition business clarifies definition business objective adding guidance assist entities evaluating whether transactions accounted acquisitions disposals assets businesses asu 201701 effective financial statements issued fiscal years beginning december 15 2017 utilizing prospective basis effective date adopt asu 201701 effective january 1 2018 expect standard update impact financial statements related disclosures 3 acquisitions april 5 2017 pursuant purchase sale agreement third party completed purchase class 15444c jackup rig related multiyear drilling contract 130 million payment 13 million made february 2017 upon execution agreement remaining 117 million paid closing rig renamed vantage 260 august 2017 substituted sapphire driller baker marine pacific class 375 jackup rig fulfill contract vantage 260 classified held sale sold february 26 2018 accounted acquisition business combination accordance accounting guidance requires among things allocate purchase price assets acquired liabilities assumed based fair values acquisition date following table provides estimated fair values assets acquired liabilities assumed accounting guidance bargain purchase gain results acquisition fair value purchase consideration paid connection acquisition less net fair value assets acquired liabilities assumed recorded bargain purchase gain approximately 19 million related acquisition year ended december 31 2017 believe able negotiate bargain purchase price result operational presence west africa seller’s liquidation purchase vantage 260 related twoyear drilling contract allowed reactivation sapphire driller extended operational presence west africa pro forma results operations related acquisition presented material consolidated statement operations acquisitionrelated costs material expensed incurred 4 reorganization items reorganization items represent amounts incurred subsequent petition date direct result filing reorganization plan comprised following year ended december 31 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 cash payments reorganization items totaled 208000 166 million 73 million respectively vantage drilling international notes consolidated financial statementscontinued 5 debt composed following aggregate scheduled principal maturities debt next five years thereafter follows thousands 1 excludes original issuance discount 548 million convertible notes financing costs 14 million 10 second lien notes second amended restated credit agreement company entered 2016 term loan facility providing 320 million revolving letter credit facility replace company’s existing 320 million revolving letter credit commitment prepetition credit facility ii 1430 million term loans claims lenders company’s prepetition credit facility converted lenders company’s prepetition credit facility also received 70 million cash reorganization plan obligations 2016 term loan facility guaranteed substantially company’s subsidiaries subject limited exceptions secured first priority basis substantially company’s guarantors’ assets including ship mortgages vessels assignments related earnings insurance pledges capital stock guarantors case subject certain exceptions issued 171 million letters credit december 31 2017 maturity date term loans commitments established 2016 term loan facility december 31 2019 interest payable unpaid principal amount term loan 2016 term loan facility libor plus 65 libor floor 05 initial term loans currently bearing interest 8069 2016 term loan facility quarterly scheduled debt maturities 357500 commenced march 2016 fees payable outstanding face amount letters credit rate per annum equal 550 rate may increased time pursuant terms 2016 term loan facility 2016 term loan facility includes customary representations warranties mandatory prepayments affirmative negative covenants events default including covenants among things restrict granting liens incurrence indebtedness making investments capital expenditures sale conveyance assets including vessels transactions affiliates prepayments certain debt operation vessels 2016 term loan facility also requires company maintain 750 million available cash defined include unrestricted cash equivalents plus undrawn commitments 10 senior secured second lien notes company engaged rights offering 750 million new 10 second lien notes certain holders secured debt claims connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors vantage drilling international notes consolidated financial statementscontinued backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds approximately 739 million deducting cash portion backstop premium 10 second lien notes issued par fully unconditionally guaranteed except customary release provisions senior secured basis subsidiaries company 10 second lien notes mature december 31 2020 bear interest date issuance rate 10 per year interest outstanding 10 second lien notes payable semiannually arrears commenced june 30 2016 interest computed basis 360day year comprised twelve 30day months 10 second lien notes rank behind 2016 term loan facility collateral indenture 10 second lien notes includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial reports 112 stepup senior secured third lien convertible notes company issued 4344959 new shares 7500 million convertible notes certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes may traded together separately convertible notes mature december 31 2030 convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2017 taking account payment pik interest convertible notes date unit securities comprised one new share 17590 principal convertible notes december 31 2017 would required issue approximately 80 million new shares convertible notes converted connection adoption freshstart accounting convertible notes recorded estimated fair value approximately 6031 million difference face value fair value date issuance convertible notes recorded debt discount amortized interest expense expected life convertible notes using effective interest rate method interest convertible notes payable semiannually arrears commencing june 30 2016 payment kind either increase outstanding principal amount convertible notes company unable increase principal amount issuance additional convertible notes interest computed basis 360day year comprised twelve 30day months rate 1 per annum first four years increasing 12 per annum maturity company’s obligations convertible notes fully unconditionally guaranteed except customary release provisions senior secured basis subsidiaries company obligations company guarantors secured liens substantially respective assets guarantees company’s subsidiaries convertible notes joint several company independent assets operations apart assets operations whollyowned subsidiaries addition significant restrictions company’s subsidiary guarantor’s ability obtain funds subsidiaries dividend loan indenture convertible notes includes customary covenants restrict granting liens customary events default including among things failure issue securities upon conversion convertible notes addition indenture applicable collateral agreements provide capital stock securities guarantors excluded collateral extent pledge capital stock securities secure convertible notes would cause guarantor required file separate financial statements sec pursuant rule 316 regulation sx effect time convertible notes convert prior third anniversary issue date february 10 2016 upon instruction holders majority principal amount convertible notes ii upon full final resolution potential investigation claims defined determined good faith board directors company “board” determination shall require affirmative vote supermajority nonmanagement directors b february 10 2019 maturity date december 31 2030 upon approval board approval shall require affirmative vote supermajority nonmanagement directors purposes “supermajority nonmanagement directors” means five affirmative votes nonmanagement directors assuming six nonmanagement directors eligible vote circumstances affirmative vote least 75 nonmanagement directors eligible vote ii “investigation claim” means claim held united states brazilian governmental unit arising related procurement certain agreement provision drilling services dated february 4 2009 petrobras venezuela investments services bv vantage deepwater company amended modified supplemented novated time event change control holders convertible notes right require us repurchase part convertible notes price equal 101 principal amount assessed prepayment requirements concluded feature met criteria considered embedded derivative must bifurcated separately valued fair value vantage drilling international notes consolidated financial statementscontinued due discount convertible notes issuance considered probabilities change control occurring determined derivative de minimis value february 10 2016 december 31 2016 december 31 2017 respectively upon occurrence specified change control events certain losses vessels agreements governing 10 second lien notes convertible notes 2016 term loan facility required offer repurchase repay case events losses vessels amount proceeds received event loss outstanding debt agreements prices upon terms set forth applicable agreements addition connection certain asset sales required offer repurchase repay outstanding debt set forth applicable debt agreements addition connection investigation sec determines violations fcpa occurred company could subject civil criminal sanctions including monetary penalties become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements following notice requisite lenders andor noteholders applicable result outstanding debt 2016 term loan facility 10 second lien notes becoming immediately due payable par outstanding debt convertible notes becoming immediately due payable makewhole amount specified indenture governing convertible notes vantage drilling international notes consolidated financial statementscontinued 6 shareholder’s equity 50000000 authorized ordinary shares par value 0001 per share upon emergence bankruptcy issued 5000053 ordinary shares connection settlement lstc vdc note december 31 2017 5000053 ordinary shares issued outstanding august 9 2016 company adopted amended restated 2016 management incentive plan “2016 amended mip” align interests participants shareholders providing incentive compensation opportunities tied performance company’s equity securities pursuant 2016 amended mip compensation committee may grant employees directors consultants stock options restricted stock restricted stock units awards first quarter 2017 granted employees directors 30668 timebased restricted stock units “tbgs” 67686 performancebased restricted stock units “pbgs” 2016 amended mip tbgs vest annually ratably four years however accelerated vesting provided event qualified liquidity event defined 2016 amended mip “qle” otherwise settlement vested tbgs occurs upon seventh anniversary effective date pbgs contain vesting eligibility provisions tied earlier qle seven years effective date upon occurrence vesting eligibility event number pbgs actually vest dependent achievement predetermined total enterprise value “tev” targets specified grants tbgs pbgs classified liabilities consistent classification underlying securities provisions asc 718 compensation stock compensation remeasured reporting period settled sharebased compensation expense recognized requisite service period grant date fourth anniversary effective date tbgs seventh anniversary effective date pbgs years ended december 31 2017 2016 recognized sharebased compensation related tbg’s approximately 40 million 402000 respectively december 31 2017 approximately 102 million total unrecognized sharebased compensation expense related tbgs expected recognized remaining weighted average vesting period approximately 27 years total award date value time vested restricted shares vested year ended december 31 2017 approximately 09 million sharebased compensation expense pbgs recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs balance sheet date recognized service period completed december 31 2017 concluded probable tev performance condition would met therefore sharebased compensation expense recognized pbgs summary restricted unit awards year ended december 31 2017 follows vantage drilling international notes consolidated financial statementscontinued summary status nonvested restricted units december 31 2017 changes year ended december 31 2017 follows 7 income taxes cayman islands entity cayman islands impose corporate income taxes domestic earnings foreign consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes operate multiple countries different legal forms result subject jurisdiction numerous domestic foreign tax authorities well tax agreements treaties among governments tax rates vary jurisdictions tax base rates applied taxes may levied based net profit taxes gross revenues withholding taxes revenue determination income tax expense jurisdiction requires interpretation related tax laws regulations use estimates assumptions regarding significant future events amount timing character deductions permissible revenue recognition methods tax law sources character income tax credits income tax expense may vary substantially one period another result changes tax laws regulations agreements treaties foreign currency exchange restrictions rig movements level operations profitability tax jurisdiction furthermore income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation operating results income tax expense furthermore jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt reorganization expenses writeoff development costs income tax expense benefit relates foreign income taxes consisted following thousands vantage drilling international notes consolidated financial statementscontinued reconciliation statutory effective income tax rates shown december 22 2017 public law 11597 commonly known tax cuts jobs act 2017 “act” enacted act among things makes significant changes us corporate income tax system including reducing federal corporate income tax rate 35 21 changes certain businessrelated deductions including modifying rules regarding limitations certain deductions executive compensation introducing capital investment deduction certain circumstances placing certain limitations interest deduction modifying rules regarding usability certain net operating losses transitions us international taxation worldwide tax system territorial tax system existing deferred tax assets liabilities revalued newly enacted us corporate rate impact recognized tax expense 2017 year enactment continue examine potential impact tax legislation may business financial results deferred income tax assets liabilities recorded expected future tax consequences events recognized financial statements tax returns provide deferred taxes temporary differences financial statements tax bases assets liabilities using enacted tax rates expected apply taxable income temporary differences expected reverse deferred tax assets also provided certain loss tax credit carryforwards valuation allowance established reduce deferred tax assets likely portion deferred tax asset realized increase valuation allowance year included taxes foreign earnings rate table related net loss carry forwards generated year believe likely substantially deferred tax asset realized components net deferred tax assets liabilities follows vantage drilling international notes consolidated financial statementscontinued december 31 2017 foreign tax loss carry forwards approximately 227 million begin expire 2018 include component income tax provision potential interest penalties related recognized tax contingencies within global operations interest penalties expense approximately 03 million included 2017 income tax expense interest penalties approximately 15 million accrued december 31 2017 reconciliation unrecognized tax benefits amount follows thousands certain jurisdictions taxed preferential tax regimes may require compliance specified requirements sustain tax benefits believe compliance specified requirements continue make reasonable efforts comply however ability meet requirements preferential tax regimes may affected changes laws business operations factors affecting company industry many beyond control periodic tax returns subject examination taxing authorities jurisdictions operate accordance normal statute limitations applicable jurisdiction examinations may result assessments additional taxes resolved authorities courts resolution matters involves uncertainties assurances outcome tax years 2010 forward remain open examination many jurisdictions currently involved several tax examinations jurisdictions operating previously operated information becomes available course examinations may increase decrease estimates tax assessments accruals 8 commitments contingencies july 2015 became aware media reports hamylton padilha brazilian agent vdc used contracting titanium explorer drillship petrobras entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives nobu su time alleged bribery scheme member board directors significant shareholder former parent company vdc learned mr padilha’s plea agreement allegations voluntarily contacted doj sec advise developments well fact engaged outside counsel conduct internal investigation allegations since disclosing matter doj sec cooperated fully investigation allegations connection cooperation advised agencies early 2010 engaged outside counsel investigate report alleged improper payments customs immigration officials asia investigation concluded 2011 determined time disclosure warranted however abundance caution provided results investigation doj sec light allegations petrobras matter august 2017 received letter doj acknowledging full cooperation doj’s investigation company concerning possible violations fcpa vdc petrobras matter indicating doj closed investigation without action addition company engaged negotiations staff division enforcement sec resolve investigation reached agreement principle staff relating terms proposed offer settlement presented commission approval assurance proposed offer settlement accepted commission company believes proposed resolution become final second quarter 2018 connection proposed offer settlement accrued liability amount 5 million commission accept proposed offer settlement sec determines violations fcpa occurred company could subject civil criminal sanctions including monetary penalties well additional requirements changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements following notice requisite lenders andor noteholders applicable result outstanding debt 2016 term loan facility 10 second lien notes becoming immediately due payable par outstanding debt convertible notes becoming immediately due payable makewhole amount specified indenture governing convertible notes vantage drilling international notes consolidated financial statementscontinued connection bankruptcy cases two appeals filed relating confirmation reorganization plan specifically january 29 2016 hsin chi su capital filed two appeals united states district court district delaware seeking reversal court’s determination hsin chi su capital standing appear heard bankruptcy cases made record hearing held january 14 2016 ii court’s findings fact conclusions law order approving debtors’ disclosure statement pursuant sections 1125 1126b bankruptcy code b solicitation votes voting procedures c forms ballots ii confirming amended joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors docket 188 entered january 15 2016 appeals consolidated june 14 2016 cannot predict certainty ultimate outcome appeals adverse outcome could negatively affect business results operations financial condition august 31 2015 vdc received notice petrobras america inc “pai” petrobras venezuela investments services bv “pvis” stating pai pvis terminating agreement provision drilling services dated february 4 2009 “drilling contract” drilling contract initially entered pvis vantage deepwater company one whollyowned indirect subsidiaries later novated pvis pai vantage deepwater company vantage deepwater drilling inc another whollyowned indirect subsidiaries notice stated pai pvis terminating drilling contract vantage allegedly breached obligations agreement terms drilling contract initiated arbitration proceedings american arbitration association august 31 2015 challenging pvis pai’s wrongful attempt terminate drilling contract vantage maintained complied obligations drilling contract pvis pai’s attempt terminate agreement improper breach drilling contract ongoing arbitration proceeding hearing merits concluded parties exchanged posthearing briefs vantage asserted claims pai pvis declaratory relief monetary damages based breach contract vantage also asserted claim petroleo brasileiro sa “pbp” enforce guaranty provided pbp petrobras entities pvis pai pbp asserted drilling contract void illegally procured pvis pbp proper parties arbitration pai pvis properly terminated contract pai counterclaimed attorneys’ fees costs alleging vantage failed negotiate good faith commencing arbitration proceedings seeking disgorgement damages approximately 102 million vigorously pursuing claims arbitration deny claims defenses asserted petrobras entities merit pursuant terms restructuring agreement company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries continue believe position regarding settlement amounts correct cannot predict ultimate outcome matter legal proceedings parties transpire enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options december 31 2017 obligated leases varying expiration dates office space housing vehicles specified operating equipment future minimum annual rentals operating leases initial remaining terms excess one year 24 million 17 million 15 million 13 million 14 million years ending december 31 2018 2019 2020 2021 2022 respectively 10 million aggregate years 2023 thereafter rental expenses year ended december 31 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 year ended december 31 2015 approximately 43 million 41 million 678000 152 million respectively december 31 2017 purchase commitments 94 million purchase commitments consist obligations outstanding external vendors primarily related materials spare parts consumables related supplies drilling rigs vantage drilling international notes consolidated financial statementscontinued 9 supplemental financial information prepaid expenses current assets prepaid expenses current assets consisted following property equipment net property equipment net consisted following assets consisted following vantage drilling international notes consolidated financial statementscontinued accrued liabilities accrued liabilities consisted following longterm liabilities longterm liabilities consisted following transactions former parent company consolidated statement operations includes following transactions vdc periods indicated following table summarizes balances payable vdc included consolidated balance sheet dates indicated pursuant terms restructuring agreement company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vantage drilling international notes consolidated financial statementscontinued vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries continue believe position regarding settlement amounts correct cannot predict ultimate outcome matter legal proceedings parties transpire 10 business segment information aggregate contract drilling operations one reportable segment even though provide contract drilling services different types rigs including jackup rigs drillships different geographic regions operations dependent global oil gas industry rigs relocated based demand services customer requirements customers consist primarily large international oil gas companies national governmentcontrolled oil gas companies international exploration production companies additionally drilling units owned others provide construction supervision services construction preservation management services stacked operations marketing services operating rigs september 2013 signed agreement supervise manage construction two ultradeepwater drillships third party receive management fees reimbursable costs construction phase two drillships subject maximum amount drillship business represented approximately 07 26 32 10 total revenue year ended december 31 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 year ended december 31 2015 respectively years ended december 31 2017 2016 2015 majority revenue countries outside united states consequently exposed risk changes economic political social conditions inherent foreign operations four customers accounted approximately 51 15 13 11 consolidated revenue year ended december 31 2017 three customers accounted approximately 58 19 11 consolidated revenue period february 10 2016 december 31 2016 three customers accounted approximately 58 18 14 consolidated revenue period january 1 2016 february 10 2016 three customers accounted approximately 32 25 20 consolidated revenue year ended december 31 2015 revenues country follows countries represent countries operate individually operating revenues representing less 10 total revenues earned property equipment net country follows vantage drilling international notes consolidated financial statementscontinued countries represent countries operate individually property equipment net representing less 10 percent total property equipment substantial portion assets mobile drilling units asset locations end period necessarily indicative geographic distribution revenues generated assets periods 11 supplemental quarterly information unaudited following table reflects summary unaudited interim results operations years ended december 31 2017 2016 thousands except per share amounts 1 quarter ended december 31 2017 recorded loss contingency amount 5 million connection proposed offer settlement sec described “note 8 commitments contingencies” loss per share computed independently periods presented therefore sum periods’ earnings loss per share may agree total computed year item 9item 8 financial statements supplementary data report independent registered public accounting firm board directors vantage drilling international houston texas opinion consolidated financial statements audited accompanying consolidated balance sheets vantage drilling international “company” subsidiaries december 31 2018 2017 related consolidated statements operations shareholders’ equity cash flows years ended december 31 2018 2017 periods february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 predecessor related notes collectively referred “consolidated financial statements” opinion consolidated financial statements present fairly material respects financial position company subsidiaries december 31 2018 2017 results operations cash flows years ended december 31 2018 2017 period february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 predecessor conformity accounting principles generally accepted united states america basis opinion consolidated financial statements responsibility company’s management responsibility express opinion company’s consolidated financial statements based audits public accounting firm registered public company accounting oversight board united states “pcaob” required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud company required engaged perform audit internal control financial reporting part audits required obtain understanding internal control financial reporting purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion emphasis matter discussed note 2 consolidated financial statements upon emerging bankruptcy proceedings february 10 2016 company became new entity financial reporting purposes applied freshstart accounting company’s assets liabilities recorded fair values differed materially previously recorded values result consolidated financial statements periods following application freshstart accounting comparable financial statements previous periods bdo usa llp served companys auditor since 2014 houston texas march 14 2019 vantage drilling international consolidated balance sheet thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement operations thousands except per share data accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement shareholder’s equity thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement cash flows thousands accompanying notes integral part consolidated financial statements vantage drilling international notes consolidated financial statements 1 organization recent events vantage drilling international “company” “vdi” cayman islands exempted company international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused international markets additionally drilling units owned others provide construction supervision services rigs construction preservation management services rigs stacked operations marketing services operating rigs refinancing november 30 2018 issued 3500 million aggregate principal amount 925 senior secured first lien notes due november 15 2023 “925 first lien notes” private placement par proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection rig purchase defined iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes 925 first lien notes guaranteed joint several basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes registered securities act 1933 amended “securities act” state securities laws concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized december 31 2018 363 million available issuance letters credit cash collateralized letter credit facility rig purchase june 13 2018 entered share purchase agreement ship finance international limited acquire shares rig finance limited entity owns soehanah jackup rig baker marine pacific class 375 jackup rig related bareboat charter rig finance limited party 846 million subject certain adjustments working capital liabilities entity discharged acquisition date “rig purchase” made payment 150 million connection execution share purchase agreement remaining 696 million paid closing december 31 2018 pursuant bareboat charter currently place respect rig entity rig chartered right acquire rig end term bareboat charter 1000 million depending rig’s valuation drilling contract arbitration august 31 2015 petrobras america inc “pai” petrobras venezuela investments services bv “pvis” subsidiaries petroleo brasileiro sa “petrobras” notified company termination agreement provision drilling services titanium explorer dated february 4 2009 “drilling contract” pvis vantage deepwater company novated pai vantage deepwater drilling inc claiming company breached obligations drilling contract vantage deepwater company vantage deepwater drilling inc whollyowned subsidiaries company immediately filed international arbitration claim pai pvis petrobras claiming wrongful termination drilling contract july 2 2018 international arbitration tribunal issued award favor vantage deepwater company vantage deepwater drilling inc tribunal found pai pvis breached drilling contract awarded vantage deepwater company vantage deepwater drilling inc damages aggregate amount 6220 million pai pvis petrobras dismissed counterclaims made petrobras parties company prejudice tribunal also awarded company interest foregoing award amount annual rate 152 compounded monthly accrue april 1 2018 respect 6156 million thereof ii october 20 2015 respect 52 million thereof iii november 19 2015 respect 12 million thereof case final payment awarded sums accordance terms award company petrobras bear legal fees expenses tribunal including compensation arbitrators aggregating approximately 15 million borne equally sides pursuant terms award amount due company december 31 2018 totaled approximately 7014 million inclusive interest july 2 2018 subsidiaries vantage deepwater company vantage deepwater drilling inc filed petition us district court southern district texas confirm arbitration award petrobras parties august 31 2018 petrobras pai pvis filed court among things response petition motion vacate arbitration award court heard petition response motion vacate march 8 2019 connection enforcing arbitration award petrobras parties secured order amsterdam district court netherlands august 22 2018 froze certain assets petrobras pvis netherlands believe valued excess claim time november 15 2018 filed petition court appeals hague netherlands recognize enforce arbitration award petrobras parties netherlands march 1 2019 petrobras parties filed statement defense court scheduled hear petition petrobras parties’ statement defense may 14 2019 company’s ability fully recover award petrobras parties subject legal procedural solvency risks associated enforcing arbitration awards circumstances addition award ultimately recovered subject reduction respect legal fees owed including among others fees contingent size award less amounts previously paid applicable taxes accordingly assurances given whether extent award ultimately recovered april 27 2018 company added additional defendant legal proceeding initiated brazilian federal public prosecutor’s office state parana brazil “brazilian federal prosecutor” certain individuals including executive petrobras two political lobbyists connection contracting titanium explorer drillship petrobras drilling contract brazilian government petrobras plaintiffs vantage alleged involved benefitted purported bribery scheme petrobras hamylton padilha brazilian agent former parent company vantage drilling company “vdc” used contracting titanium explorer drillship petrobras mr hsinchi su former member board directors significant shareholder vdc first became aware legal proceeding july 19 2018 previously seal company formally served advised brazilian authorities particular charges company understands legal proceeding called improbity action civil action part brazilian federal prosecutor’s larger “car wash” investigation money laundering corruption allegations petrobras damages claimed proceeding amount brl 1028 million approximately 310 million together civil fine equal three times amount company understands brazilian court hearing proceeding issued order authorizing seizure freezing assets company three defendants legal proceeding precautionary measure amount approximately 1240 million company three defendants jointly severally liable amount seizure order effect company’s assets operations company assets brazil currently intend relocate assets brazil february 13 2019 learned brazilian federal prosecutor requested mutual legal assistance us department justice pursuant united nations convention corruption 2003 obtain freezing order company’s us assets amount 1240 million company believes request supported applicable law intends vigorously oppose defend attempts seize assets company intends vigorously defend allegations made underlying improbity action however neither predict ultimate outcome matter developments “car wash” investigation ongoing investigation related proceeding could adversely affect us restructuring agreement emergence voluntary reorganization chapter 11 proceeding december 1 2015 vdc entered restructuring support agreement “restructuring agreement” majority secured creditors pursuant terms restructuring agreement company agreed pursue prepackaged plan reorganization “reorganization plan” chapter 11 title 11 united states bankruptcy code vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange 615 million promissory note “vdc note” transaction involved reorganization entities common control reflected consolidated financial statements carryover basis retrospective basis effective company’s emergence bankruptcy february 10 2016 “effective date” vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new ordinary shares reorganized company “new shares” accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date december 3 2015 “petition date” company certain subsidiaries certain vdc subsidiaries guarantors company’s prebankruptcy secured debt filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 united states district court district delaware confirmed company’s prepackaged reorganization plan company emerged bankruptcy effective date pursuant terms reorganization plan prebankruptcy term loans senior notes retired effective date issuing debtholders 4344959 units reorganized company “units” unit securities originally consisted one new share 17261 principal company’s 112 stepup senior secured third lien convertible notes due 2030 “convertible notes” subject adjustment upon payment interest kind “pik interest” certain cases redemption conversion convertible notes well share splits share dividends consolidation reclassification new shares new shares convertible notes subject terms agreement prohibits new shares convertible notes traded separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2018 taking account payment pik interest convertible notes date unit consisted one new share 17766 principal convertible notes significant elements reorganization plan included second amended restated credit agreement company’s prepetition credit agreement amended replace 320 million revolving letter credit commitment prepetition facility new 320 million revolving letter credit facility ii repay 1500 million outstanding borrowings 70 million cash b issuance 1430 million initial term loans “2016 term loan facility” november 2018 obligations 2016 term loan facility repaid 2016 term loan facility credit agreement terminated connection issuance 925 first lien notes see “refinancing” 10 senior secured second lien notes holders company’s prepetition term loans senior notes claims eligible participate rights offering conducted company 750 million company’s new 10 senior secured second lien notes due 2020 “10 second lien notes” connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds company 739 million deducting cash portion backstop premium november 2018 10 second lien notes redeemed connection issuance 925 first lien notes see “refinancing” reorganization plan allowed company continue business operations court proceedings maintain operating assets agreements company adequate liquidity prior filing seek debtorinpossession financing trade payables credits wages related obligations unimpaired reorganization plan 2 basis presentation significant accounting policies basis consolidation accompanying consolidated financial information december 31 2018 2017 years ended december 31 2018 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 prepared accordance generally accepted accounting principles united states america “us gaap” pursuant rules regulations sec include accounts majority owned subsidiaries variable interest entities “vies” discussed significant intercompany transactions accounts eliminated connection bankruptcy filing subject provisions financial accounting standards board “fasb” accounting standards codification “asc” 852 reorganizations “asc 852” expenses realized gains losses provisions losses directly associated bankruptcy proceedings classified reorganization items consolidated statements operations certain prepetition liabilities subject chapter 11 proceedings considered lstc petition date prior emergence bankruptcy effective date lstc classification distinguished liabilities expected compromised liabilities incurred postpetition asc 852 requires subsequent petition date expenses realized gains losses provisions losses directly associated reorganization business reported separately reorganization items consolidated statements operations required distinguish prepetition liabilities subject compromise postpetition liabilities balance sheet liabilities subject compromise reported amounts expected allowed bankruptcy court even settled lesser amounts result reorganization plan upon emergence bankruptcy effective date adopted freshstart accounting accordance asc 852 resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated financial statements february 10 2016 related adjustments thereto recorded consolidated statements operations reorganization items predecessor period january 1 february 10 2016 result consolidated balance sheets consolidated statement operations subsequent effective date comparable consolidated balance sheets statements operations prior effective date consolidated financial statements related notes presented black line division delineates lack comparability amounts presented february 10 2016 dates prior financial results periods following application freshstart accounting different historical trends differences may material references “successor” relate company subsequent effective date references “predecessor” refer company prior effective date consolidated financial statements successor prepared assuming company continue going concern contemplate realization assets satisfaction liabilities normal course business addition consolidation majority owned subsidiaries also consolidate vies determined primary beneficiary vie determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie certain subsidiaries vdc guarantors prepetition debt part reorganization plan became subsidiaries upon emergence bankruptcy effective date consolidated entities predecessor consolidated financial statements determined vies primary beneficiary following table summarizes net effect consolidating entities predecessor consolidated statement operations cash equivalents includes deposits financial institutions well shortterm money market instruments maturities three months less purchased inventory consists materials spare parts consumables related supplies drilling rigs property equipment consists drilling rigs furniture fixtures computer equipment capitalized costs computer software drilling rigs depreciated component basis estimated useful lives ranging five thirtyfive years straightline basis date placed service assets depreciated upon placement service estimated useful lives ranging three seven years straightline basis assets sold retired otherwise disposed cost related accumulated depreciation removed accounts gain loss recognized years ended december 31 2018 2017 period february 10 2016 december 31 2016 recognized net gain 13 million net losses 335000 652000 respectively related sale retirement assets recognize gain loss sale retirement assets period january 1 2016 february 10 2016 evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy february 10 2016 adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value projections assumptions used valuation changed significantly december 31 2018 accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable interest costs amortization debt financing costs related financings drilling rigs capitalized part cost construction prior commencement vessel’s first contract capitalize interest reported periods intangible assets connection acquisition vantage 260 related multiyear drilling contract company recorded identifiable intangible asset 126 million fair value acquired favorable drilling contract resulting intangible asset amortized straightline basis twoyear term drilling contract recognized approximately 63 million 47 million amortization expense intangible assets years ended december 31 2018 2017 respectively recognize amortization expense intangible assets period february 10 2016 december 31 2016 period january 1 2016 february 10 2016 expected future intangible asset amortization december 31 2018 follows debt financing costs incurred debt financings deferred amortized term related financing facility straightline basis approximates interest method debt issuance costs related recognized debt liability presented consolidated balance sheet direct deduction carrying amount debt liability rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable tax deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense concentrations credit risk financial instruments potentially subject us significant concentration credit risk consist primarily cash equivalents restricted cash accounts receivable maintain deposits federally insured financial institutions excess federally insured limits monitor credit ratings concentration risk financial institutions continuing basis safeguard cash deposits limited number key customers primarily large international oil gas operators national oil companies international oil gas companies contracts provide monthly billings services performed monitor compliance contract payment terms ongoing basis payment terms customer invoices typically range 30 45 days outstanding receivables beyond payment terms promptly investigated discussed specific customer allowance doubtful accounts trade receivables december 31 2018 2017 use estimates preparation financial statements accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ongoing basis evaluate estimates including related property equipment income taxes insurance employee benefits contingent liabilities actual results could differ estimates functional currency consider us dollar functional currency operations since majority revenues expenditures denominated us dollars limits exposure currency exchange rate fluctuations recognize currency exchange rate gains losses net years ended december 31 2018 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 recognized net loss 15 million net gain 28 million net gain 11 million net loss 5000 respectively related currency exchange rates fair value financial instruments fair value shortterm financial assets liabilities approximates carrying amounts represented balance sheet principally due shortterm nature floating rate nature instruments december 31 2018 fair value 925 first lien notes convertible notes approximately 3409 million 7345 million respectively based quoted market prices less active market level 2 measurement recently adopted accounting standards adopted asu 201409 revenue contracts customers asc 606 effective january 1 2018 using modified retrospective implementation method standard outlines fivestep model whereby revenue recognized performance obligations within contract satisfied standard also requires new expanded disclosures regarding revenue recognition adopted new revenue standard using modified retrospective approach required make changes prior year presentation evaluating outstanding contracts determined cumulative effect adjustment retained earnings adjustments made prior periods asc 606 requires additional disclosure regarding revenues recognized customer contracts adoption material impact consolidated financial statements see “note 3 revenue contracts customers” adopted asu 201615 classification certain cash receipts cash payments effective january 1 2018 standard addresses classification presentation eight specific cash flow issues previously resulted diverse practice adoption standard minimal impact presentation cash receipts cash payments within consolidated statement cash flows adopted asu 201618 statement cash flows asc 230 restricted cash effective january 1 2018 standard requires amounts generally described restricted cash restricted cash equivalents included cash equivalents reconciling beginning end period total amounts presented statement cash flows standard also requires details nature amounts restricted cash aside presenting restricted cash restricted cash equivalents component beginning ending cash balances consolidated statement cash flows changes material effect consolidated financial statements related disclosures adopted asu 201616 income taxes asc 740 intraentity transfers assets inventory effective january 1 2018 standard requires entities recognize income tax consequences intraentity transfer asset inventory transaction occurs opposed deferring tax consequences amortizing future periods adoption standard impact consolidated financial statements related disclosures adopted asu 201701 business combinations asc 805 clarifying definition business effective january 1 2018 standard clarifies definition business objective adding guidance assist entities evaluating whether transactions accounted acquisitions disposals assets businesses adoption standard impact consolidated financial statements related disclosures recently issued accounting standards february 2016 fasb issued asu 201602 leases asc 842 amendments fasb asc july 2018 asc 842 amended asu 201811 targeted improvements standard requires lessees recognize rightofuse assets lease liabilities balance sheet leases term longer 12 months disclose key information leasing arrangements adopted asc 842 amended january 1 2019 electing apply standard prospectively restating comparative periods transition method allows initial recognition cumulative catchup adjustment opening balance retained earnings year adoption however based analysis current lease arrangements expect adjustment required new standard provides number optional practical expedients transition expect elect “package practical expedients” permits us reassess new standard prior conclusions lease identification lease classification initial direct costs new standard also provides practical expedients entity’s ongoing accounting expect elect shortterm lease recognition exemption leases qualify also expect elect practical expedient separate lease nonlease components leases drilling contracts contain lease component related underlying drilling equipment addition service component provided crews expertise operate drilling equipment determined nonlease service component drilling contracts predominant element combined component account combined components single performance obligation topic 606 revenue contracts customers bareboat charter contract recently acquired soehanah jackup rig considered new lease acquisition date accounted operating lease new standard based lease arrangements lessee december 31 2018 expect recognize aggregate lease liability corresponding righttouse asset 90 million 100 million based currently identified lease portfolio continue refine estimate 3 revenue contracts customers activities primarily drive revenue earned drilling contracts customers include providing drilling rig work crews related equipment services necessary operate rig ii delivering drilling rig mobilizing demobilizing drill site iii performing preoperating activities including rig preparation activities andor equipment modifications required contract integrated drilling services perform drilling contract represents single performance obligation satisfied time comprised series distinct time increments service periods dayrate drilling revenue drilling contracts generally provide payment dayrate basis higher rates periods drilling unit operating lower rates zero rates periods drilling operations interrupted restricted dayrate billed customer determined based varying rates applicable specific activities performed hourly basis dayrate consideration allocated distinct hourly increment relates within contract term therefore recognized perform daily drilling services mobilizationdemobilization revenue connection certain contracts receive lumpsum fees similar compensation mobilization equipment personnel prior commencement drilling services demobilization equipment personnel upon contract completion activities considered distinct within context contract therefore associated revenue allocated overall single performance obligation mobilization fees received prior commencement drilling operations recorded contract liability amortized straightline basis initial contract period demobilization fees expected received upon contract completion estimated contract inception recognized straightline basis initial contract term offset accretive contract asset many contracts demobilization fees contingent upon occurrence nonoccurrence future event estimate revenue may therefore constrained fees received mobilization demobilization equipment personnel included contract drilling revenues capital upgradecontract preparation revenue connection certain contracts receive lumpsum fees similar compensation requested capital upgrades drilling rigs contract preparation work activities considered distinct within context contract therefore fees received recorded contract liability amortized contract drilling revenues straightline basis initial contract term revenues related reimbursable expenses generally receive reimbursements customers purchase supplies equipment personnel services provided request accordance drilling contract agreement generally considered principal transactions therefore recognize reimbursable revenues corresponding costs provide customerrequested goods services elected exclude transaction price measurement taxes assessed governmental authority disaggregation revenue following tables present revenue disaggregated revenue source periods indicated accounts receivable contract liabilities contract costs accounts receivable recognized right consideration becomes unconditional based upon contractual billing schedules payment terms customer invoices typically range 30 45 days recognize contract liabilities recorded “accrued liabilities” “longterm liabilities” prepayments received customers deferred revenue received mobilization contract preparation capital upgrades certain direct incremental costs incurred contract preparation initial mobilization modifications contracted rigs represent contract fulfillment costs relate directly contract enhance resources used satisfy performance obligations future expected recovered costs deferred current noncurrent asset depending length initial contract term amortized straightline basis operating costs services rendered initial term related drilling contract costs incurred capital upgrades capitalized depreciated useful life asset costs incurred demobilization rigs contract completion recognized incurred demobilization process costs incurred mobilize rig without contract expensed incurred following table provides information contract cost assets contract revenue liabilities contracts customers significant changes contract cost assets contract revenue liabilities year ended december 31 2018 follows 1 expect recognize contract revenues approximately 46 million 2019 21 million thereafter related unsatisfied performance obligations existing december 31 2018 elected utilize optional exemption permits us exclude disclosure estimated transaction price related variable portion unsatisfied performance obligations end reporting period transaction price based single performance obligation consisting series distinct hourly increments variability resolved time future services 4 acquisitions june 13 2018 entered share purchase agreement ship finance international limited acquire shares rig finance limited entity owns soehanah jackup rig baker marine pacific class 375 jackup rig related bareboat charter rig finance limited party 846 million subject certain adjustments working capital liabilities entity discharged acquisition date made payment 150 million connection execution share purchase agreement remaining 696 million paid closing december 31 2018 pursuant bareboat charter currently place respect rig entity rig chartered right acquire rig end term bareboat charter 1000 million depending rig’s valuation accounted acquisition asset purchase accordance accounting guidance considering substantially fair value gross assets acquired concentrated soehanah jackup rig inplace lease intangible using cost accumulation model cost acquisition allocated assets acquired follows 1 including 04 million transaction costs pro forma results operations related acquisition material consolidated statement operations april 2017 pursuant purchase sale agreement third party completed purchase class 15444c jackup rig related multiyear drilling contract 130 million payment 13 million made february 2017 upon execution agreement remaining 117 million paid closing rig renamed vantage 260 classified held sale acquisition sold february 26 2018 august 2017 substituted sapphire driller baker marine pacific class 375 jackup rig fulfill drilling contract accounted acquisition vantage 260 business combination accordance accounting guidance required among things allocate purchase price assets acquired liabilities assumed based fair values acquisition date following table provides estimated fair values assets acquired liabilities assumed accounting guidance bargain purchase gain results acquisition fair value purchase consideration paid connection acquisition less net fair value assets acquired liabilities assumed recorded bargain purchase gain approximately 19 million related acquisition year ended december 31 2017 believe able negotiate bargain purchase price result operational presence west africa seller’s liquidation purchase vantage 260 related twoyear drilling contract allowed reactivation sapphire driller extended operational presence west africa pro forma results operations related acquisition presented material consolidated statement operations acquisitionrelated costs material expensed incurred 5 reorganization items reorganization items represent amounts incurred subsequent petition date direct result filing reorganization plan comprised following year ended december 31 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 cash payments reorganization items totaled 208000 166 million 73 million respectively 6 debt composed following aggregate scheduled principal maturities debt next five years thereafter follows thousands 1 excludes original issuance discount 54 million convertible notes financing costs 76 million 925 first lien notes 925 first lien notes november 30 2018 company issued 3500 million aggregate principal amount 925 first lien notes private placement 925 first lien notes issued par fully guaranteed senior secured basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes subject first payment priority favor holders 500 million future superpriority debt subject mandatory optional redemption provisions 925 first lien notes mature november 15 2023 bear interest date issuance rate 925 per year interest computed basis 360day year comprised twelve 30day months payable semiannually arrears commencing may 15 2019 indenture 925 first lien notes includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial reports net proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection rig purchase iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized issued 137 million letters credit facility december 31 2018 second amended restated credit agreement part reorganization plan company entered 2016 term loan facility providing 320 million revolving letter credit facility replace company’s existing 320 million revolving letter credit commitment prepetition credit facility ii 1430 million term loans claims lenders company’s prepetition credit facility converted lenders company’s prepetition credit facility also received 70 million cash reorganization plan obligations 2016 term loan facility guaranteed substantially company’s subsidiaries subject limited exceptions secured first priority basis substantially company’s guarantors’ assets including ship mortgages vessels assignments related earnings insurance pledges capital stock guarantors case subject certain exceptions november 2018 obligations 2016 term loan facility repaid 2016 term loan facility credit agreement terminated connection issuance 925 first lien notes 10 senior secured second lien notes company engaged rights offering 750 million new 10 second lien notes certain holders prepetition secured debt claims connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds approximately 739 million deducting cash portion backstop premium 10 second lien notes issued par fully unconditionally guaranteed except customary release provisions senior secured basis subsidiaries company 10 second lien notes scheduled mature december 31 2020 bore interest date issuance rate 10 per year interest outstanding 10 second lien notes payable semiannually arrears commenced june 30 2016 interest computed basis 360day year comprised twelve 30day months 10 second lien notes ranked behind 2016 term loan facility collateral november 2018 10 second lien notes redeemed connection issuance 925 first lien notes 112 stepup senior secured third lien convertible notes company issued 4344959 new shares 7500 million convertible notes certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes may traded together separately convertible notes mature december 31 2030 convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2018 taking account payment pik interest convertible notes date unit securities comprised one new share 17766 principal convertible notes december 31 2018 would required issue approximately 81 million new shares convertible notes converted connection adoption freshstart accounting convertible notes recorded estimated fair value approximately 6031 million difference face value fair value date issuance convertible notes recorded debt discount amortized interest expense expected life convertible notes using effective interest rate method interest convertible notes payable semiannually arrears commencing june 30 2016 payment kind either increase outstanding principal amount convertible notes company unable increase principal amount issuance additional convertible notes interest computed basis 360day year comprised twelve 30day months rate 10 per annum first four years increasing 120 per annum maturity company’s obligations convertible notes fully unconditionally guaranteed except customary release provisions senior secured basis subsidiaries company obligations company guarantors secured liens substantially respective assets guarantees company’s subsidiaries convertible notes joint several company independent assets operations apart assets operations whollyowned subsidiaries addition significant restrictions company’s subsidiary guarantor’s ability obtain funds subsidiaries dividend loan indenture convertible notes includes customary covenants restrict granting liens customary events default including among things failure issue securities upon conversion convertible notes addition indenture applicable collateral agreements provide capital stock securities guarantors excluded collateral extent pledge capital stock securities secure convertible notes would cause guarantor required file separate financial statements sec pursuant rule 316 regulation sx effect time convertible notes convert prior third anniversary issue date february 10 2016 upon instruction holders majority principal amount convertible notes ii upon full final resolution potential investigation claims defined determined good faith board directors company “board” determination shall require affirmative vote supermajority nonmanagement directors b february 10 2019 maturity date december 31 2030 upon approval board approval shall require affirmative vote supermajority nonmanagement directors purposes “supermajority nonmanagement directors” means five affirmative votes nonmanagement directors assuming six nonmanagement directors eligible vote circumstances affirmative vote least 75 nonmanagement directors eligible vote ii “investigation claim” means claim held united states brazilian governmental unit arising related procurement drilling contract amended modified supplemented novated time event change control holders convertible notes right require us repurchase part convertible notes price equal 1010 principal amount assessed prepayment requirements concluded feature met criteria considered embedded derivative must bifurcated separately valued fair value due discount convertible notes issuance considered probabilities change control occurring determined derivative de minimis value december 31 2017 december 31 2018 respectively 7 shareholder’s equity 50000000 authorized ordinary shares par value 0001 per share upon emergence bankruptcy issued 5000053 ordinary shares connection settlement lstc vdc note december 31 2018 5000053 ordinary shares issued outstanding august 9 2016 company adopted amended restated 2016 management incentive plan “2016 amended mip” align interests participants shareholders providing incentive compensation opportunities tied performance company’s equity securities pursuant 2016 amended mip compensation committee may grant employees directors consultants stock options restricted stock restricted stock units awards year ended december 31 2018 granted employee 1030 timebased restricted stock units “tbgs” 2403 performancebased restricted stock units “pbgs” 2016 amended mip period four directors granted 300 tbgs total 1200 tbgs issued 2016 amended mip vest annually ratably four years however accelerated vesting provided event qualified liquidity event defined 2016 amended mip “qle” otherwise settlement vested tbgs occurs upon seventh anniversary effective date pbgs contain vesting eligibility provisions tied earlier qle seven years effective date upon occurrence vesting eligibility event number pbgs actually vest dependent achievement predetermined total enterprise value “tev” targets specified grants tbgs pbgs classified liabilities consistent classification underlying securities provisions asc 718 compensation stock compensation remeasured reporting period settled sharebased compensation expense recognized requisite service period grant date fourth year vest date tbgs seventh anniversary effective date pbgs years ended december 31 2018 2017 2016 recognized sharebased compensation related tbg’s approximately 72 million 40 million 402000 respectively december 31 2018 approximately 85 million total unrecognized sharebased compensation expense related tbgs expected recognized remaining weighted average vesting period approximately 17 years total award date value time vested restricted shares vested year ended december 31 2018 approximately 23 million sharebased compensation expense pbgs recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs balance sheet date recognized service period completed december 31 2018 concluded probable tev performance condition would met therefore sharebased compensation expense recognized pbgs summary restricted unit awards year ended december 31 2018 follows summary status nonvested restricted units december 31 2018 changes year ended december 31 2018 follows 8 income taxes cayman islands entity cayman islands impose corporate income taxes domestic earnings foreign consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes operate multiple countries different legal forms result subject jurisdiction numerous domestic foreign tax authorities well tax agreements treaties among governments tax rates vary jurisdictions tax base rates applied taxes may levied based net profit taxes gross revenues withholding taxes revenue determination income tax expense jurisdiction requires interpretation related tax laws regulations use estimates assumptions regarding significant future events amount timing character deductions permissible revenue recognition methods tax law sources character income tax credits income tax expense may vary substantially one period another result changes tax laws regulations agreements treaties foreign currency exchange restrictions fluctuations rig movements level operations profitability tax jurisdiction furthermore income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation operating results income tax expense furthermore jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt gains losses disposal transfer assets reorganization expenses writeoff development costs income tax expense benefit relates foreign income taxes consisted following thousands reconciliation statutory effective income tax rates shown december 22 2017 public law 11597 commonly known tax cuts jobs act 2017 “act” enacted act among things made significant changes us corporate income tax system including reducing federal corporate income tax rate 35 21 changed certain businessrelated deductions including modifying rules regarding limitations certain deductions executive compensation introducing capital investment deduction certain circumstances placing certain limitations interest deduction modifying rules regarding usability certain net operating losses transitioned us international taxation worldwide tax system modified territorial tax system completed evaluation impact act financial statements guidance december 2018 concluded adjustments required beyond remeasurement deferred taxes recorded 2017 deferred income tax assets liabilities recorded expected future tax consequences events recognized financial statements tax returns provide deferred taxes temporary differences financial statements tax bases assets liabilities using enacted tax rates expected apply taxable income temporary differences expected reverse deferred tax assets also provided certain loss tax credit carryforwards valuation allowance established reduce deferred tax assets likely portion deferred tax asset realized establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities components net deferred tax assets liabilities follows december 31 2018 foreign tax loss carry forwards approximately 193 million begin expire 2019 include component income tax provision potential interest penalties related recognized tax contingencies within global operations interest penalties expense approximately 3000 included 2018 income tax expense total interest penalties approximately 15 million accrued december 31 2018 reconciliation unrecognized tax benefits amount follows thousands certain jurisdictions taxed preferential tax regimes may require compliance specified requirements sustain tax benefits believe compliance specified requirements continue make reasonable efforts comply however ability meet requirements preferential tax regimes may affected changes laws business operations factors affecting company industry many beyond control periodic tax returns subject examination taxing authorities jurisdictions operate accordance normal statute limitations applicable jurisdiction examinations may result assessments additional taxes resolved authorities courts resolution matters involves uncertainties assurances outcome tax years 2010 forward remain open examination many jurisdictions currently involved several tax examinations jurisdictions operating previously operated information becomes available course examinations may increase decrease estimates tax assessments accruals 9 commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims july 2015 became aware media reports hamylton padilha brazilian agent vdc used contracting titanium explorer drillship petrobras entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives mr hsinchi su time alleged bribery scheme member board directors significant shareholder former parent company vdc learned mr padilha’s plea agreement allegations voluntarily contacted doj sec advise developments well fact engaged outside counsel conduct internal investigation allegations since disclosing matter doj sec cooperated fully investigation allegations connection cooperation advised agencies early 2010 engaged outside counsel investigate report alleged improper payments customs immigration officials asia investigation concluded 2011 determined time disclosure warranted however abundance caution provided results investigation doj sec light allegations petrobras matter august 2017 received letter doj acknowledging full cooperation doj’s investigation company concerning possible violations fcpa vdc petrobras matter indicating doj closed investigation without action november 19 2018 concluded settlement agreement sec resolving sec’s investigation possible violations internal accounting control provisions fcpa vdc’s subsidiaries including vantage’s subsidiaries foregoing subsidiaries vdc commencement investigation part settlement agreement paid sec 50 million neither admitted denied sec’s allegations except jurisdiction admitted accrued liability payment fourth quarter 2017 settlement matter sec earlier decision doj close inquiry vantage vdc without taking action us government’s investigation vantage vdc possible violations fcpa formally concluded connection bankruptcy cases two appeals filed relating confirmation reorganization plan specifically january 29 2016 mr hsinchi su capital filed two appeals united states district court district delaware seeking reversal court’s determination mr hsinchi su capital standing appear heard bankruptcy cases made record hearing held january 14 2016 ii court’s findings fact conclusions law order approving debtors’ disclosure statement pursuant sections 1125 1126b bankruptcy code b solicitation votes voting procedures c forms ballots ii confirming amended joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors docket 188 entered january 15 2016 appeals consolidated june 14 2016 cannot predict certainty ultimate outcome appeals adverse outcome could negatively affect business results operations financial condition january 10 2019 mr hsinchi su company capital filed declaratory action us united states district court district delaware seeking ruling court confirmation reorganization plan prevent mr hsinchi su capital suing company certain unspecified claims based theory fraud alleged valued excess 20 billion filed motion dismiss court march 4 2019 intend vigorously defend claims deem meritless however cannot predict certainty ultimate decision court respect mr hsinchi su’s request august 31 2015 pai pvis subsidiaries petrobras notified company termination drilling contract pvis vantage deepwater company novated pai vantage deepwater drilling inc claiming company breached obligations drilling contract vantage deepwater company vantage deepwater drilling inc whollyowned subsidiaries company immediately filed international arbitration claim pai pvis petrobras claiming wrongful termination drilling contract july 2 2018 international arbitration tribunal issued award favor vantage deepwater company vantage deepwater drilling inc tribunal found pai pvis breached drilling contract awarded vantage deepwater company vantage deepwater drilling inc damages aggregate amount 6220 million pai pvis petrobras dismissed petrobras parties’ counterclaims company prejudice tribunal also awarded company interest foregoing award amount annual rate 152 compounded monthly accrue april 1 2018 respect 6156 million thereof ii october 20 2015 respect 52 million thereof iii november 19 2015 respect 12 million thereof case final payment awarded sums accordance terms award company petrobras bear legal fees expenses tribunal including compensation arbitrators aggregating approximately 15 million borne equally sides july 2 2018 subsidiaries vantage deepwater company vantage deepwater drilling inc filed petition us district court southern district texas confirm arbitration award petrobras parties august 31 2018 petrobras pai pvis filed court among things response petition motion vacate arbitration award court heard petition response motion vacate march 8 2019 connection enforcing arbitration award petrobras parties secured order amsterdam district court netherlands august 22 2018 froze certain assets petrobras pvis netherlands believe valued excess claim time november 15 2018 filed petition court appeals hague netherlands recognize enforce arbitration award petrobras parties netherlands march 1 2019 petrobras parties filed statement defense court scheduled hear petition petrobras parties’ statement defense may 14 2019 company’s ability fully recover award petrobras parties subject legal procedural solvency risks associated enforcing arbitration awards circumstances addition award ultimately recovered subject reduction respect legal fees owed including among others fees contingent size award less amounts previously paid applicable taxes accordingly assurances given whether extent award ultimately recovered april 27 2018 company added additional defendant legal proceeding initiated brazilian federal prosecutor certain individuals including executive petrobras two political lobbyists connection contracting titanium explorer drillship petrobras drilling contract brazilian government petrobras plaintiffs company alleged involved benefitted purported bribery scheme petrobras messrs padilha mr hsin chi su first became aware legal proceeding july 19 2018 previously seal company formally served advised brazilian authorities particular charges company understands legal proceeding called improbity action civil action part brazilian federal prosecutor’s larger “car wash” investigation money laundering corruption allegations petrobras damages claimed proceeding amount brl 1028 million approximately 310 million together civil fine equal three times amount company understands brazilian court hearing proceeding issued order authorizing seizure freezing assets company three defendants legal proceeding precautionary measure amount approximately 1240 million company three defendants jointly severally liable amount seizure order effect company’s assets operations company assets brazil currently intend relocate assets brazil february 13 2019 learned brazilian federal prosecutor requested mutual legal assistance us department justice pursuant united nations convention corruption 2003 obtain freezing order company’s us assets amount 1240 million company believes request supported applicable law intends vigorously oppose defend attempts seize assets company intends vigorously defend allegations made underlying improbity action however neither predict ultimate outcome matter developments “car wash” investigation ongoing investigation related proceeding could adversely affect us pursuant terms restructuring agreement company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc ongoing discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries continue believe position regarding settlement amounts correct cannot predict ultimate outcome matter legal proceedings parties transpire enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options december 31 2018 obligated leases varying expiration dates office space housing vehicles specified operating equipment future minimum annual rentals operating leases initial remaining terms excess one year 33 million 27 million 06 million 06 million 03 million years ending december 31 2019 2020 2021 2022 2023 respectively net sublease proceeds rental commitments years 2024 thereafter rental expenses years ended december 31 2018 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 approximately 60 million 43 million 41 million 678000 respectively december 31 2018 purchase commitments 191 million purchase commitments consist obligations outstanding external vendors primarily related capital upgrades materials spare parts consumables related supplies drilling rigs 10 supplemental financial information prepaid expenses current assets prepaid expenses current assets consisted following property equipment net property equipment net consisted following assets consisted following accrued liabilities accrued liabilities consisted following longterm liabilities longterm liabilities consisted following cash equivalents restricted cash following table provides reconciliation cash equivalents restricted cash reported within consolidated balance sheet sum total amounts shown consolidated statement cash flows dates indicated restricted cash december 31 2018 represents cash held banks certificates deposit collateralizing letters credit transactions former parent company consolidated statement operations includes following transactions vdc periods indicated following table summarizes balances payable vdc included consolidated balance sheet dates indicated pursuant terms restructuring agreement company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries continue believe position regarding settlement amounts correct cannot predict ultimate outcome matter legal proceedings parties transpire related party transactions december 31 2018 material related party transactions ordinary course business 11 business segment information aggregate contract drilling operations one reportable segment even though provide contract drilling services different types rigs including jackup rigs drillships different geographic regions operations dependent global oil gas industry rigs relocated based demand services customer requirements customers consist primarily large international oil gas companies national governmentcontrolled oil gas companies international exploration production companies additionally drilling units owned others provide construction supervision services construction preservation management services stacked operations marketing services operating rigs september 2013 signed agreement supervise manage construction two ultradeepwater drillships third party receive management fees reimbursable costs construction phase two drillships subject maximum amount drillship management business represented less 4 total revenue years ended december 31 2018 2017 periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 respectively years ended december 31 2018 2017 2016 majority revenue countries outside united states consequently exposed risk changes economic political social conditions inherent foreign operations three customers accounted approximately 40 15 14 consolidated revenue year ended december 31 2018 four customers accounted approximately 51 15 13 11 consolidated revenue year ended december 31 2017 three customers accounted approximately 58 19 11 consolidated revenue period february 10 2016 december 31 2016 three customers accounted approximately 58 18 14 consolidated revenue period january 1 2016 february 10 2016 revenues country follows countries represent countries operate individually operating revenues representing less 10 total revenues earned respective periods property equipment net country follows countries represent countries operate individually property equipment net representing less 10 percent total property equipment end respective period substantial portion assets mobile drilling units asset locations end period necessarily indicative geographic distribution revenues generated assets periods 12 supplemental quarterly information unaudited following table reflects summary unaudited interim results operations years ended december 31 2018 2017 2016 thousands except per share amounts 1 quarter ended december 31 2017 recorded loss contingency amount 50 million connection proposed offer settlement sec described “note 9 commitments contingencies” loss per share computed independently periods presented therefore sum periods’ earnings loss per share may agree total computed year item 9item 8 financial statements supplementary data report independent registered public accounting firm shareholders board directors vantage drilling international houston texas opinion consolidated financial statements audited accompanying consolidated balance sheets vantage drilling international “company” subsidiaries december 31 2020 2019 related consolidated statements operations shareholders’ equity deficit cash flows three years period ended december 31 2020 related notes collectively referred “consolidated financial statements” opinion consolidated financial statements present fairly material respects financial position company subsidiaries december 31 2020 2019 results operations cash flows three years period ended december 31 2020 conformity accounting principles generally accepted united states america basis opinion consolidated financial statements responsibility company’s management responsibility express opinion company’s consolidated financial statements based audits public accounting firm registered public company accounting oversight board united states “pcaob” required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud company required engaged perform audit internal control financial reporting part audits required obtain understanding internal control financial reporting purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion critical audit matter critical audit matter communicated matter arising current period audit consolidated financial statements communicated required communicated audit committee 1 relates accounts disclosures material consolidated financial statements 2 involved especially challenging subjective complex judgments communication critical audit matter alter way opinion consolidated financial statements taken whole communicating critical audit matter providing separate opinion critical audit matter accounts disclosures relates property equipment impairment assessment described companys consolidated financial statements net carrying value property equipment december 31 2020 5163 million described note 2 company evaluates recoverability property equipment whenever events changes circumstances indicate carrying amount asset group may recoverable triggering events 2020 company observed deterioration macroeconomic conditions oil price market share volatility reductions delays oil gas exploration development plans operators result economic impact covid19 pandemic company determined events constituted triggering events requiring assessment asset group impairment resulted 1289 million property equipment impairment loss year ended december 31 2020 identified significant judgments made management prepare undiscounted cash flow analyses asset group evaluate whether impairment existed asset group critical audit matter significant assumptions used undiscounted cash flows estimates included effect day rates utilization metrics auditing elements especially challenging required significant auditor judgment due nature extent audit effort required performing procedures evaluating audit evidence related management’s assumptions primary procedures performed address critical audit matter included • evaluating reasonableness dayrate utilization assumptions used undiscounted cash flow estimates evaluating completeness accuracy current backlog ii potential drilling rig opportunities iii considering available industry reports data supply demand trends future oil gas prices • comparing assumptions used company’s historic undiscounted cash flow estimates assess management biases estimates bdo usa llp served companys auditor since 2014 houston texas march 18 2021 vantage drilling international consolidated balance sheet thousands except share data accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement operations thousands except per share data accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement shareholder’s equity thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement cash flows thousands accompanying notes integral part consolidated financial statements vantage drilling international notes consolidated financial statements 1 organization recent events vantage drilling international cayman islands exempted company together consolidated subsidiaries collectively “company” international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil gas companies focused international markets additionally drilling units owned others provide construction supervision services rigs construction preservation management services rigs stacked operations marketing services operating rigs continued global spread covid19 january 30 2020 world health organization “who” announced global health emergency covid19 continued spread globally beyond point origin march 2020 classified covid19 outbreak pandemic based rapid increase exposure globally risks posed international community continued global spread covid19 caused widespread illness significant loss life leading governments across world impose severely stringent limitations movement human interaction governmental responses pandemic depressed economic activity worldwide impacting industries significant adverse effect oil gas industry response governments throughout world address spread covid19 including among actions imposition travel bans quarantines entry restrictions notably impacted operations particularly challenging ability transport personnel equipment rigs customers suppliers able seamlessly manage conduct respective operations result challenges one customers invoked “force majeure” clause drilling contract us subsequently terminated drilling contract accordance terms potential others similarly exercise “force majeure” clauses respective drilling contracts b two customers terminated drilling contracts prior end respective terms contracts expire normal course second quarter 2020 c december 2020 customer terminated drilling contract prior commencement operations reached agreement april 2020 place one rig standby rate majority second quarter 2020 “force majeure” standby rates received company generally less original day rates otherwise payable company however rig returned operations july 2020 e reached agreements two customers delay start dates new drilling programs remain ongoing discussions another customer regarding operations existing drilling contract program f experienced could continue experience delays collection certain accounts receivables due logistical obstacles office closures resulting covid19 outbreak well impacts longterm liquidity g incurred additional labor costs could continue incur additional labor costs future result efforts keep personnel safe quarantine requirements closures movement restrictions certain jurisdictions operate well home countries certain offshore personnel located many cases impeded could continue impede foreseeable future regular transportation crews home countries result payment compensation stranded crews working longer routine rotation schedule addition use charter flights absence commercial flights impact challenges 2020 resulted lower revenue due terminations amendments certain drilling contracts ii increased expenses due higher labor related costs cannot time determine certainty long challenges persist well longterm impact challenges may operations goforward basis however company actively managing continues actively manage business attempt mitigate impact foregoing matters order decrease company’s overall operating expenses company undertook significant headcount salary reductions onshore offshore well cost reduction measures reflect lower operating activity declines demand oil gas resulting oil price market share volatility collapse global economic activity resulting covid19 outbreak 2020 caused demand global oil gas significantly decline moreover members opec russia failed reach agreement march 2020 extend previously agreed upon oil production cuts make much needed additional oil production cuts thereafter saudi arabia announced immediate significant reduction oil export prices russia announced agreed oil production cuts russia opec members would expire april 1 2020 termination previous cooperation saudi arabia russia immediate impact given supported global oil prices past saudi arabia’s subsequent decision dramatically increase oil production engage price war russia led massive oversupply oil resulted overwhelming global oil storage capacities price market share war later reversed opec russia many world’s major oil producers reaching record production cut agreement april 12 2020 extending agreement june 6 2020 however confluence spread covid19 resulting global oil surplus significantly adversely impacted oil gas industry beginning second quarter 2020 causing unprecedented drop oil prices brent crude reaching 1933 per barrel lowest price since 1999 ii ensuing reductions exploration production company capital operating budgets though opec russia major oil gas producing nations agreed either cut maintain levels oil production case march 2021 efforts contain covid19 could continue depress global economic activity nearterm supply demand imbalance oil gas likely continue foreseeable future notwithstanding recent recovery global oil prices since development availability vaccines covid19 ii perception reopening global economies along iii injection substantial government monetary fiscal stimulus volatility uncertainty around global oil prices persist volatility uncertainty global oil gas prices caused oil gas producers cancel delay drilling tenders 2020 negatively impacted reported backlog could potentially negatively impact future backlog material payment delays modifications cancellations underlying contracts including limited delays modifications cancellations directly indirectly attributable covid19 reduced amount backlog previously reported could reduce amount backlog currently reported consequently could inhibit conversion backlog revenues potential oil prices decline future continues put pressure oil gas activity levels particularly deepwater segment oil gas prices expected continue volatile result ongoing covid19 outbreaks changes oil gas inventories industry demand therefore company cannot predict long oil gas prices remain stable improve whether could reverse course decline management actively monitoring foregoing events associated financial impact uncertain time full magnitude volatile uncertain oil gas prices financial condition future results operations platinum explorer contract award february 3 2021 vdi received letter award oil natural gas company ongc twoyear contract platinum explorer platinum explorer currently performing existing threeyear contract ongc expected conclude second quarter 2021 new contract ongc expected begin existing campaign concludes expected revenues new twoyear contract term exclusive service tax approximately 109 million operations management agreement seadrill partners february 9 2021 vantage holdings international “vhi” subsidiary vdi entered framework agreement seadrill partners llc “seadrill partners” pursuant certain subsidiaries vhi “vhi entities” entered enter additional management marketing agreements “management marketing agreements” certain subsidiaries seadrill partners “seadrill entities” management marketing agreements vhi entities provide marketing operations management services respect certain deepwater floaters owned seadrill entities management marketing agreements subject approval us bankruptcy court southern district texas drilling contract arbitration february 22 2021 us supreme court denied petrobras parties’ petition certiorari efforts seek reversal us court appeals fifth circuit’s decision affirm us district court texas’s judgment confirming petrobras award denial us supreme court ended drilling contract arbitration petrobras parties related appeals see “note 9 commitments contingencies” “notes consolidated financial statements” additional details drilling contract arbitration purchase sale agreement sell titanium explorer december 31 2020 entered purchase sale agreement best oasis limited “buyer” sell titanium explorer “purchase sale agreement” subject closing conditions contained agreement aggregate purchase price 138 million subsequently classified rig held sale consolidated balance sheet transactions contemplated purchase sale agreement closed march 10 2021 pursuant purchase sale agreement buyer required recycle rig environmentally sound manner impairment titanium explorer’s carrying value third quarter 2020 evaluated deepwater drilling rigs indicators impairment determined carrying value longerterm warm stacked drillship titanium explorer impaired result recognized noncash loss impairment 1289 million september 30 2020 see “note 2 basis presentation significant accounting policies” “notes consolidated financial statements” additional information regarding impairment titanium explorer restructuring agreement associated settlement agreement company entered settlement agreement vdc march 4 2020 release claims pertaining certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries see “note 9 commitments contingencies” “notes consolidated financial statements” additional details restructuring agreement associated settlement agreement 2 basis presentation significant accounting policies basis consolidation accompanying consolidated financial information december 31 2020 2019 years ended december 31 2020 2019 2018 prepared accordance us gaap pursuant rules regulations sec include accounts majority owned subsidiaries vies discussed significant intercompany transactions accounts eliminated addition consolidation majority owned subsidiaries also consolidate vies determined primary beneficiary vie determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie advantage joint venture company formed operate deepwater drilling rigs egypt determined advantage met criteria vie accounting purposes equity risk insufficient permit carry activities without additional subordinated financial support us also determined primary beneficiary accounting purposes since entitled use advantage deepwater drilling contract opportunities rejected ades power direct operating activities associated deepwater drilling rigs activities significantly impact entity’s economic performance b obligation absorb losses right receive majority benefits could potentially significant vie result consolidate advantage consolidated financial statements eliminate intercompany transactions present interests owned us “noncontrolling interests” consolidated balance sheet carrying amount associated advantage follows advantage majority owned subsidiary company serves guarantor first lien indenture relating 925 first lien notes 925 first lien notes secured first priority lien assets advantage subject certain exceptions creditors’ recourse advantage liabilities advantage limited assets advantage see “note 1 organization recent events” “note 10 supplemental financial information” “notes consolidated financial statements” additional details regarding joint venture use estimates preparation financial statements accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ongoing basis evaluate estimates including related property equipment income taxes insurance employee benefits contingent liabilities actual results could differ estimates cash equivalents includes deposits financial institutions well shortterm money market instruments maturities three months less purchased materials supplies consists materials spare parts consumables related supplies drilling rigs record materials supplies average cost property equipment consists drilling rigs furniture fixtures computer equipment capitalized costs computer software drilling rigs depreciated component basis estimated useful lives ranging five 35 years straightline basis date placed service assets depreciated upon placement service estimated useful lives ranging three seven years straightline basis assets sold retired otherwise disposed cost related accumulated depreciation removed balance sheet resulting gain loss included “operating costs” “general administrative” expenses consolidated statement operations depending nature asset years ended december 31 2020 2019 2018 recognized net loss approximately 01 million net loss approximately 02 million net gain approximately 13 million respectively related sale retirement assets evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil gas exploration development production expenditures oil gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy effective date adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value result continued spread covid19 oil price market share volatility tested impairment based impairment indicators identified first quarter 2020 recoverability test performed resulted impairment loss recorded estimated undiscounted cash flows generated drilling rigs exceeded carrying values march 31 2020 projections assumptions used analysis change significantly three months ended june 30 2020 accordingly triggering event occurred indicate carrying value drilling rigs would recoverable time third quarter 2020 identified indicators carrying amounts deepwater asset groups may recoverable indicators included continued impact covid19 global economic activity resulting reductions delays deepwater oil gas exploration development plans part operators leading increased barriers reactivation stacked rigs result impairment testing determined carrying amount longerterm warm stacked drillship titanium explorer impaired subsequently recognized noncash loss impairment 1289 million september 30 2020 measured fair value titanium explorer applying market approach using estimates exchange price would received assets principal advantageous market measurement date estimate fair value required us use significant observable inputs representative level 3 fair value measurements including marketability rig prices comparable rigs may sold scrap value recoverability test performed two deepwater rigs resulted impairment loss recorded estimated undiscounted cash flows generated rigs exceeded carrying values september 30 2020 platinum explorer currently operating tungsten explorer scheduled recommence operations second quarter 2021 projections assumptions used third quarter 2020 changed significantly december 31 2020 accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable interest costs amortization debt financing costs related financings drilling rigs capitalized part cost construction prior commencement vessel’s first contract capitalize interest reported periods intangible assets april 2017 pursuant purchase sale agreement third party completed purchase vantage 260 class 15444c jackup rig related multiyear drilling contract 130 million connection acquisition recorded identifiable intangible asset 126 million fair value acquired favorable drilling contract resulting intangible asset amortized straightline basis twoyear term drilling contract ended april 2019 recognized approximately 16 million 63 million amortization expense intangible assets years ended december 31 2019 2018 respectively debt financing costs incurred debt financings deferred amortized term related financing facility straightline basis approximates interest method debt issuance costs related recognized debt liability presented consolidated balance sheet direct deduction carrying amount debt liability rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods revenue recognition see “note 3 revenue contracts customers” “notes consolidated financial statements” information income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable tax deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense concentrations credit risk financial instruments potentially subject us significant concentration credit risk consist primarily cash equivalents restricted cash accounts receivable maintain deposits federally insured financial institutions excess federally insured limits monitor credit ratings concentration risk financial institutions continuing basis safeguard cash deposits limited number key customers primarily large international oil gas operators national oil companies international oil gas companies contracts provide monthly billings services performed monitor compliance contract payment terms ongoing basis payment terms customer invoices typically range 30 45 days outstanding receivables beyond payment terms promptly investigated discussed specific customer credit losses accounts receivable allowance doubtful accounts based company’s assessment collectability customer accounts current estimates expected credit losses consider factors historical experience credit quality customers company considers historical loss information reasonable basis determine expected credit losses unless current forecasted future conditions customers customer groups indicate risk characteristics changed considered impact covid19 pandemic associated oil price market share volatility see “the continued global spread covid19” “declines demand oil gas resulting oil price market share volatility” set forth “note 1 organization recent events” “notes consolidated financial statements” current estimate credit losses december 31 2020 december 31 2020 allowance doubtful accounts trade receivables 50 million amount represents customer’s decision pay us days impacted believe force majeure events would entitled receive payment contract disagree decision evaluating remedies contract december 31 2019 allowance doubtful accounts trade receivables immaterial earnings loss per share compute basic diluted eps accordance twoclass method include restricted stock units granted employees contain nonforfeitable rights dividends grants considered participating securities basic earnings loss per share based weighted average number ordinary shares outstanding applicable period diluted eps computed based weighted average number ordinary shares ordinary share equivalents outstanding applicable period potentially dilutive securities converted ordinary shares using treasury stock method following reconciliation number shares used basic diluted eps computations following sets forth number shares excluded diluted eps computations functional currency consider usd functional currency operations since majority revenues expenditures denominated usd limits exposure currency exchange rate fluctuations recognize currency exchange rate gains losses “other net” consolidated statement operations years ended december 31 2020 2019 2018 recognized net gain 04 million net gain 02 million net loss 15 million respectively related currency exchange rates fair value financial instruments fair value shortterm financial assets liabilities approximates carrying amounts represented balance sheet principally due shortterm nature floating rate nature instruments december 31 2020 fair value 925 first lien notes approximately 1979 million based quoted market prices less active market level 2 measurement sharebased compensation tbgs granted 2016 amended mip vest annually ratably four years however accelerated vesting provided event qle otherwise settlement vested tbgs occurs upon seventh anniversary effective date pbgs granted 2016 amended mip contain vesting eligibility provisions tied earlier qle seven years effective date upon occurrence vesting eligibility event number pbgs actually vest dependent achievement predetermined tev targets specified grants tbgs pbgs classified liabilities consistent classification underlying securities prior conversion following conversion outstanding tbgs pbgs subject modification accounting reclassified equity awards provisions asc 718 compensation stock compensation sharebased compensation expense recognized requisite service period grant date fourth year vest date tbgs pbgs expense recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs conversion date convertible notes recognized service period completed seventh anniversary effective date pbgs noncontrolling interest noncontrolling interests represent equity investments minority owner advantage joint venture ades consolidate financial statements recently adopted accounting standards june 2016 fasb issued asu 201613 “financial instruments credit losses” asu related asus issued subsequently fasb introduce new model recognizing credit losses financial assets accounted fair value net income including loans debt securities trade receivables net investments leases availableforsale debt securities new asu broadens information entity must consider developing estimates expected credit losses requires entity estimate credit losses life exposure based historical information current information reasonable supportable forecasts adopted asu january 1 2020 using modified retrospective approach adoption asu material impact consolidated financial statements customers primarily international oil companies national oil companies large independent oil companies historically low incidence bad debt expense company monitored continue actively monitor impact covid19 outbreak expected credit losses august 2018 fasb issued asu 201815 intangibles goodwill internaluse software asu requires capitalization certain implementation costs incurred cloud computing arrangement service contract adopted standard january 1 2020 impact consolidated financial statements recently issued accounting standards december 2019 fasb issued asu 201912 “income taxes topic 740 simplifying accounting income taxes” asu simplifies accounting income taxes removing certain exceptions general principles topic 740 also simplifies improves consistent application gaap areas topic 740 clarifying amending existing guidance amendments asu effective fiscal years beginning december 15 2020 interim periods therein early adoption permitted adopt asu effective date first quarter 2021 date annual report anticipate adoption materially affect consolidated financial statements 3 revenue contracts customers activities primarily drive revenue earned drilling contracts customers include providing drilling rig work crews related equipment services necessary operate rig ii delivering drilling rig mobilizing demobilizing drill site iii performing preoperating activities including rig preparation activities andor equipment modifications required contract integrated drilling services perform drilling contract represent single performance obligation satisfied time comprised series distinct time increments service periods dayrate drilling revenue drilling contracts generally provide payment dayrate basis higher rates periods drilling unit operating lower rates zero rates periods drilling operations interrupted restricted dayrate billed customer determined based varying rates applicable specific activities performed hourly basis dayrate consideration allocated distinct hourly increment relates within contract term therefore recognized perform daily drilling services amortizable revenue connection certain contracts receive lumpsum fees similar compensation mobilization equipment personnel prior commencement drilling services ii demobilization equipment personnel upon contract completion iii postponement fees consideration postponement contract later date activities considered distinct within context contract therefore associated revenue allocated overall single performance obligation mobilization fees received prior commencement drilling operations recorded contract liability amortized straightline basis initial contract period demobilization fees expected received upon contract completion estimated contract inception recognized straightline basis initial contract term offset accretive contract asset many contracts demobilization fees contingent upon occurrence nonoccurrence future event estimate revenue may therefore constrained postponement fees received contingent upon occurrence nonoccurrence future event recognized straightline basis contract term fees received mobilization demobilization equipment personnel postponement contract later date included “contract drilling services” capital upgradecontract preparation revenue connection certain contracts receive lumpsum fees similar compensation requested capital upgrades drilling rigs contract preparation work activities considered distinct within context contract therefore fees received recorded contract liability amortized contract drilling revenues straightline basis initial contract term contract termination revenue june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award see “note 9 commitments contingencies” “notes consolidated financial statements” additional information regarding petrobras agreement petrobras award year ended december 31 2019 recognized approximately 5940 million “contract termination revenue” 1069 million “interest income” associated petrobras payments defined “note 9 commitments contingencies” “notes consolidated financial statements” revenues related reimbursable expenses generally receive reimbursements customers purchase supplies equipment personnel services provided request accordance drilling contract agreement generally considered principal transactions therefore recognize reimbursable revenues corresponding costs provide customerrequested goods services elected exclude transaction price measurement taxes assessed governmental authority disaggregation revenue following tables present revenue disaggregated revenue source periods indicated dayrate revenue amortized revenue “jackups” “deepwater” included within “contract drilling services” consolidated statement operations revenue excluding “contract termination revenue” included within “reimbursables other” consolidated statement operations accounts receivable contract liabilities contract costs accounts receivable recognized right consideration becomes unconditional based upon contractual billing schedules payment terms customer invoices typically range 30 45 days recognize contract liabilities recorded “other current liabilities” “other longterm liabilities” consolidate balance sheet prepayments received customers deferred revenue received mobilization contract preparation capital upgrades certain direct incremental costs incurred contract preparation initial mobilization modifications contracted rigs represent contract fulfillment costs relate directly contract enhance resources used satisfy performance obligations future expected recovered costs deferred current noncurrent asset depending length initial contract term amortized straightline basis operating costs services rendered initial term related drilling contract costs incurred capital upgrades capitalized depreciated useful life asset costs incurred demobilization rigs contract completion recognized incurred demobilization process costs incurred mobilize rig without contract expensed incurred following table provides information contract cost assets contract revenue liabilities contracts customers significant changes contract cost assets contract revenue liabilities year ended december 31 2020 follows 1 expect recognize contract revenues approximately 51 million 2021 related unsatisfied performance obligations existing december 31 2020 elected utilize optional exemption permits us exclude disclosure estimated transaction price related variable portion unsatisfied performance obligations end reporting period transaction price based single performance obligation consisting series distinct hourly increments variability resolved time future services 4 acquisitions june 13 2018 entered share purchase agreement ship finance international limited acquire shares rig finance limited entity owns soehanah jackup rig baker marine pacific class 375 jackup rig related bareboat charter rig finance limited party 846 million subject certain adjustments working capital liabilities entity discharged acquisition date made payment 150 million connection execution share purchase agreement remaining 696 million paid closing december 31 2018 may 2019 parties bareboat charter terminated charterer’s right acquire rig end term bareboat charter accounted acquisition asset purchase accordance accounting guidance considering substantially fair value gross assets acquired concentrated soehanah jackup rig inplace lease intangible using cost accumulation model cost acquisition allocated assets acquired follows 1 including 04 million transaction costs pro forma results operations related acquisition material consolidated statement operations april 2017 pursuant purchase sale agreement third party completed purchase class 15444c jackup rig related multiyear drilling contract 130 million payment 13 million made february 2017 upon execution agreement remaining 117 million paid closing august 2017 substituted sapphire driller baker marine pacific class 375 jackup rig fulfill drilling contract rig renamed vantage 260 classified held sale acquisition sold february 26 2018 51 million 5 leases operating leases expiring various dates principally office space onshore storage yards certain operating equipment additionally sublease certain office space third parties determine arrangement lease inception operating leases initial term greater 12 months included “operating lease rou assets” “other current liabilities” “other longterm liabilities” consolidated balance sheet operating lease rou assets operating lease liabilities recognized based present value future lease payments lease term commencement date leases provide implicit rate use incremental borrowing rate based information available commencement date determining present value future payments operating lease rou asset also includes lease payments made prior commencement date reduced lease incentives received initial direct costs incurred lease terms may include options extend terminate lease reasonably certain exercise option lease expense recognized straightline basis lease term lease agreements lease nonlease components generally accounted separately certain leases include provisions variable payments variable payments included calculation lease liability rou assets components lease expense follows 1 shortterm lease costs 05 million 25 million years ended december 31 2020 2019 respectively operating cash flows used operating leases approximates lease expense december 31 2020 maturities lease liabilities follows december 31 2020 weighted average discount rate weighted average remaining lease term operating leases 925 23 years respectively rou assets lease liabilities recorded leases commencing three months ended december 31 2020 immaterial bareboat charter contract soehanah jackup rig accounted operating lease charter revenue included “reimbursables other” consolidated statement operations may 2019 parties bareboat charter terminated charterer’s right acquire rig end term bareboat charter originally intended end december 31 2019 however terms bareboat charter lease term continued rig redelivered company occurred february 3 2020 please refer “note 4 acquisitions” “notes consolidated financial statements” additional information pertaining acquisition soehanah jackup rig 6 debt composed following dates indicated aggregate scheduled principal maturities debt next five years thereafter follows thousands 1 excludes financing costs 48 million 925 first lien notes 925 first lien notes november 30 2018 company issued 3500 million aggregate principal amount 925 first lien notes private placement 925 first lien notes issued par fully guaranteed senior secured basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes subject first payment priority favor holders 500 million future superpriority debt subject mandatory optional redemption provisions 925 first lien notes mature november 15 2023 bear interest date issuance rate 925 per year interest computed basis 360day year comprised twelve 30day months payable semiannually arrears commencing may 15 2019 first lien indenture includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial reports net proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement governing facility ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection purchase soehanah jack rig iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized issued 101 million letters credit facility december 31 2020 july 8 2019 commenced offer repurchase 750 million 925 first lien notes purchase price equal 1000 principal 925 first lien notes repurchased plus accrued unpaid interest additional amounts including date fixed purchase 925 first lien notes tendered pursuant offer purchase cash made pursuant terms first lien indenture connection receipt subsidiaries vdeep vddi approximately 6908 million 101 million respectively june 21 2019 account petrobras award accordance first lien indenture required offer purchase least 750 million 925 first lien notes accordance terms thereof 925 first lien notes tendered purchase offer expiration date accordingly company concluded obligation first lien indenture conduct offer accordance terms first lien indenture proceeds petrobras agreement net direct costs relating recovery thereof available use company without restrictions first lien indenture convertible notes part reorganization plan company issued 4344959 new shares 7500 million convertible notes certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes could traded together separately convertible notes mature december 31 2030 convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes included customary covenants restricted among things granting liens customary events default including among things failure issue securities upon conversion convertible notes june 7 2019 company announced board directors approved conversion convertible notes ordinary shares company take effect promptly practicable july 1 2019 subject satisfaction certain conditions required indenture governing convertible notes company announced july 18 2019 light petrobras agreement petrobras parties certain company’s subsidiaries board directors decided reevaluate whether best interests company shareholders proceed conversion point time action undertaken company time proceed conversion november 18 2019 company announced board directors authorized conversion december 4 2019 outstanding principal amount approximately 7758 million converted outstanding ordinary shares rate approximately 001046 equates one ordinary share per 9560 principal amount convertible notes 7 shareholders’ equity stock issuance vdi 50000000 authorized ordinary shares upon emergence bankruptcy effective date vdi issued 5000053 ordinary shares connection settlement lstc accordance reorganization plan vdc note december 4 2019 vdi issued additional 8114977 ordinary shares convert outstanding convertible notes see “note 6 debt” “notes consolidated financial statements” additional information regarding conversion december 31 2020 13115026 ordinary shares issued outstanding special cash distribution november 18 2019 company announced board directors declared special cash distribution aggregate amount 5250 million 4003 per share paid december 17 2019 shareholders record close business december 10 2019 “special cash distribution” special cash distribution use proceeds petrobras award company bound judgment preservation insurance insure contingency required return petrobras payment see note 9 commitments contingencies “notes consolidated financial statements” additional information petrobras award petrobras payment sharebased compensation august 9 2016 company adopted amended 2016 mip align interests participants shareholders providing incentive compensation opportunities tied performance company’s equity securities pursuant 2016 amended mip compensation committee may grant employees directors consultants stock options restricted stock restricted stock units awards december 31 2020 308239 shares available future grant amended 2016 mip prior conversion tbgs pbgs classified liabilities consistent classification underlying securities following conversion outstanding tbgs pbgs subject modification accounting reclassified equity awards connection conversion restricted stock unit converted approximately 2868 company common shares pershare average fair value 6626 additional compensation costs recognized conversion change terms affecting estimate fair value pursuant amended 2016 mip terms applicable unit awards participants holding restricted stock units contractually entitled receive dividends distributions paid vdi stockholders provided dividends subject vesting requirements underlying units dividend payments accrue outstanding awards vested unvested form “dividend equivalents” equal dividend per share underlying applicable mip award result special cash distribution discussed “note 7 shareholders’ equity” “notes consolidated financial statements” 80 million recorded “other longterm liabilities” consolidated balance sheet december 31 2020 paid settlement tbgs outstanding tbgs pbgs subject modification accounting result special cash distribution discussed “note 7 shareholders’ equity” “notes consolidated financial statements” additional compensation costs recognized result special cash distribution change terms affecting estimate fair value years ended december 31 2020 2019 2018 recognized sharebased compensation related tbgs approximately 16 million 10 million 72 million respectively december 31 2020 approximately 05 million total unrecognized sharebased compensation expense related tbgs expected recognized remaining weighted average vesting period approximately 05 years total award date value time vested restricted shares vested year ended december 31 2020 approximately 36 million sharebased compensation expense pbgs recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs conversion date recognized service period completed december 31 2020 concluded probable tev performance condition would met therefore sharebased compensation expense recognized pbgs remaining weighted average vesting period approximately 21 years summary status nonvested restricted units december 31 2020 changes year ended december 31 2020 follows 8 income taxes vdi cayman islands corporation operating multiple countries subsidiaries cayman islands impose corporate income taxes consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation net operating results income tax expense furthermore jurisdictions pay taxes pay taxes lower rates receive benefits certain income expense items including interest expense loss extinguishment debt gains losses disposal transfer assets reorganization expenses writeoff development costs january 22 2020 vdi filed tax election irs treated partnership rather corporation us federal income tax purposes effective date retroactive december 9 2019 result us holders required take account allocable share items income gain loss deduction credit vdi taxable year vdi ending within us holder’s taxable year regardless whether distribution received vdi item generally character source either us foreign though us holder realized item directly anticipate vdi’s tax status material impact consolidated financial statements march 27 2020 coronavirus aid relief economic security act “cares act” enacted sweeping stimulus bill intended bolster us economy provide emergency financial assistance qualifying businesses individuals cares act among things modified net operating losses carryovers carrybacks rules included modifications section 163j code increase allowable business interest deduction december 31 2020 analysis provisions cares act revealed material implications income tax provision income tax expense benefit consisted following thousands reconciliation statutory effective income tax rates shown components net deferred tax assets liabilities follows december 31 2020 foreign tax loss carry forwards approximately 79 million expire beginning 2021 increase foreign tax loss carry forwards primarily due losses incurred current year offset expired utilized amounts reduction valuation allowance primarily results expiration loss carryforwards valuation allowance releases upon utilization certain loss carry forwards include component income tax provision potential interest penalties related recognized tax contingencies within global operations interest penalties expense approximately 04 million included 2020 income tax expense total interest penalties approximately 13 million accrued december 31 2020 reconciliation unrecognized tax benefits amount excluding interest penalties recognize component income tax expense follows thousands periodic tax returns subject examination taxing authorities jurisdictions operate accordance normal statute limitations applicable jurisdiction examinations may result assessments additional taxes resolved authorities courts resolution matters involves uncertainties assurances outcome tax years 2010 onward remain open examination many jurisdictions currently involved several tax examinations jurisdictions operating previously operated information becomes available course examinations may increase decrease estimates tax assessments accruals 9 commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims drilling contract arbitration august 31 2015 pai pvis subsidiaries petrobras notified company termination drilling contract pvis vdeep novated pai vddi claiming company breached obligations drilling contract vdeep vddi whollyowned subsidiaries company immediately filed international arbitration claim petrobras parties claiming wrongful termination drilling contract july 2 2018 international arbitration tribunal issued petrobras award favor vdeep vddi tribunal found petrobras parties breached drilling contract awarded vdeep vddi damages aggregate amount 6220 million petrobras parties dismissed petrobras parties’ counterclaims company prejudice tribunal also awarded company interest foregoing award amount annual rate 152 compounded monthly accrue april 1 2018 respect 6156 million thereof ii october 20 2015 respect 52 million thereof iii november 19 2015 respect 12 million thereof case final payment petrobras award accordance terms petrobras award company petrobras bore legal fees expenses tribunal including compensation arbitrators aggregating approximately 15 million borne equally sides july 2 2018 vdeep vddi filed petition “petition” us district court texas confirm petrobras award petrobras parties august 31 2018 petrobras parties filed us district court texas among things response petition motion vacate petrobras award “response motion vacate” march 8 2019 us district court texas heard petition response motion vacate may 20 2019 us district court texas granted petition confirm petrobras award petrobras parties denied petrobras parties’ motion vacate petrobras award may 22 2019 us district court texas rendered final judgment favor vdeep vddi amount approximately 7340 million separately connection enforcing petrobras award petrobras parties vdeep vddi secured order amsterdam district court netherlands august 22 2018 froze certain assets petrobras pvis netherlands believe valued excess claim time november 15 2018 vdeep vddi filed petition court appeals hague netherlands recognize enforce petrobras award petrobras parties netherlands “dutch enforcement action” march 1 2019 petrobras parties filed statement defense court appeals court appeals heard petition vdeep vddi petrobras parties’ statement defense may 14 2019 june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award petrobras agreement considered petrobras award amount together interest calculated may 22 2019 reduced amount 45 pursuant petrobras agreement pvis agreed pay vdeep 690810875 pai agreed pay vddi 10128565 collectively “petrobras payments” full satisfaction payment petrobras award related judgment entered us district court texas confirming petrobras award “judgment” neither party released claims except certain claims respect certain prejudgment attachments made vdeep vddi certain assets pvis petrobras netherlands vdeep vddi received petrobras payments full june 21 2019 petrobras agreement vdeep vddi required take actions order release liens certain petrobras assets united states netherlands addition parties agreed petrobras agreement stay dutch enforcement action time final nonappealable judgment us proceedings time petrobras parties assert claim reimbursement part petrobras payments whichever earlier petrobras parties filed notice appeal us court appeals fifth circuit “fifth circuit” seeking reversal judgment confirmed petrobras award denied motion vacatur us court appeals fifth circuit held oral arguments among parties june 10 2020 july 16 2020 court affirmed judgment petrobras award favor denied petrobras parties’ motion vacatur subsequently petrobras parties filed petition fifth circuit rehearing panel heard appeal separately rehearing entire fifth circuit august 28 2020 threejudge panel entire fifth circuit denied petrobras parties’ respective petitions rehearing petrobras parties filed petition certiorari us supreme court january 25 2021 seeking reversal fifth circuit’s decision affirming us district court’s decision confirm petrobras award february 22 2021 us supreme court denied petrobras parties’ petition therefore foregoing matter closed brazil improbity action april 27 2018 company added additional defendant legal proceeding initiated brazilian federal prosecutor certain individuals including executive petrobras two political lobbyists connection contracting titanium explorer drillship petrobras drilling contract brazilian government petrobras plaintiffs vantage alleged involved benefitted purported bribery scheme petrobras hamylton padilha brazilian agent former parent company vdc used contracting titanium explorer drillship petrobras mr hsin chi su former member vdc’s board directors significant shareholder vdc first became aware legal proceeding july 19 2018 previously seal march 22 2019 formally served united states april 12 2019 filed preliminary statement defense 11th federal court judicial branch curitiba state parana brazil “brazilian federal court” august 20 2020 brazilian federal court dismissed preliminary statement defense october 5 2020 subsequently filed motion clarify brazilian federal court requesting reconsideration certain aspects decision dismissing preliminary statement defense obligated file statement defense matter defendants served legal proceeding company understands legal proceeding called improbity action civil action part brazilian federal prosecutor’s larger “car wash” investigation money laundering corruption allegations brazil damages claimed proceeding amount brl 1028 million approximately 204 million date annual report together civil fine equal three times amount company understands brazilian federal court proceeding issued order authorizing seizure freezing assets company three defendants legal proceeding precautionary measure amount approximately 816 million date annual report company three defendants jointly severally liable amount seizure order effect company’s assets operations company assets brazil currently intend relocate assets brazil february 13 2019 learned brazilian federal prosecutor previously requested mutual legal assistance us doj pursuant united nations convention corruption 2003 obtain freezing order company’s us assets amount 816 million date annual report company believes request supported applicable law intends vigorously oppose defend attempts seize assets april 12 2019 filed interlocutory appeal 4th circuit federal court appeals porto alegre state rio grande sul brazil “brazilian appellate court” appellate court hearing appeals “car wash” cases stay seizure freezing order brazilian federal court may 20 2019 company announced brazilian appellate court ruled favor company’s appeal stay seizure freezing order brazilian federal court foregoing ruling still subject confirmation threejudge panel subject appeal company offer assurances stay confirmed outcome appeal thereof company communicated brazilian appellate court’s ruling doj asked brazilian federal court july 18 2019 company announced brazilian government made filing brazilian federal court reporting doj advised brazilian ministry justice would possible doj comply mutual assistance request respect asset freeze order company also announced learned brazilian ministry justice doj’s response request mutual assistance stated legal grounds existed implementing requested asset freeze doj returning request without taking action considers matter concluded company intends vigorously defend allegations made underlying improbity action however neither predict ultimate outcome matter developments “car wash” investigation ongoing investigation related proceeding could adversely affect us time yet able determine likelihood loss arising matter restructuring agreement associated settlement agreement pursuant terms restructuring agreement among vdc majority secured creditors company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation vdc joint official liquidators appointed oversee liquidation vdc entered discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries march 4 2020 subsidiaries one hand vdc subsidiaries entered settlement agreement pursuant parties settlement agreement agreed release certain claims exchange vantage paying vdc 150 million subject approval court grand cayman march 16 2020 court grand cayman approved settlement agreement march 25 2020 company paid 150 million accordance settlement agreement fully resolving matter recorded gain 23 million related settlement agreement included “other income” consolidated statement operations year ended december 31 2020 commitments enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options see “note 5 leases” “notes consolidated financial statements” information pertaining future minimum lease obligations december 31 2020 purchase commitments 102 million purchase commitments consist obligations outstanding external vendors primarily related capital upgrades materials spare parts consumables related supplies drilling rigs 10 supplemental financial information prepaid expenses current assets prepaid expenses current assets consisted following 1 includes aggregate carrying amount titanium explorer along related assets december 31 2020 see “note 1 organization recent events” “notes consolidated financial statements” additional details regarding purchase sale agreement sell titanium explorer property equipment net property equipment net consisted following assets consisted following current liabilities current liabilities consisted following 1 includes 21 million 24 million december 31 2020 2019 respectively related cash awards granted certain key employees company pursuant underlying award agreements issued 2016 mip longterm liabilities longterm liabilities consisted following 1 dividend equivalents vested tbgs payable settlement applicable award see “note 7 shareholders’ equity” “notes consolidated financial statements” additional information regarding dividend equivalents cash equivalents restricted cash following table provides reconciliation cash equivalents restricted cash reported within consolidated balance sheet sum total amounts shown consolidated statement cash flows dates indicated restricted cash represents cash held banks certificates deposit collateralizing letters credit transactions former parent company following table summarizes balances payable vdc included company’s consolidated balance sheet dates indicated see “note 9 commitments contingencies” “notes consolidated financial statements” additional information regarding balances payable vdc related party transactions association establishment advantage company ades contributed cash advantage excess issued capital joint venture understanding amounts considered shareholder loans december 31 2020 total outstanding amount due ades excess cash contributions approximately 708000 included “other current liabilities” consolidated balance sheet conjunction establishment advantage company entered series agreements ades including secondment agreement ii manpower agreement iii supply services agreement pursuant agreements company largely seconded employees provide various services ades turn provide various services advantage december 31 2020 accounts receivable ades totaled approximately 22 million accounts payable ades totaled approximately 31 million included “trade receivables” “accounts payable” respectively consolidated balance sheet see “note 1 organization recent events” “notes consolidated financial statements” additional details regarding joint venture mr thomas r bates jr chairman director company december 2019 elected chairman weatherford international “weatherford” provider equipment services company december 2019 june 30 2020 company engaged various transactions ordinary course business weatherford purchase certain equipment services mr bates’ tenure chairman weatherford totaled 03 million six months ended june 30 2020 except foregoing related party transactions conducted ordinary course business december 31 2020 11 business segment information aggregate contract drilling operations one reportable segment even though provide contract drilling services different types rigs including jackup rigs drillships different geographic regions operations dependent global oil gas industry rigs relocated based demand services customer requirements customers consist primarily large international oil gas companies national governmentcontrolled oil gas companies international exploration production companies soehanah jackup rig operated bareboat charter contract place acquisition additionally drilling units owned others provide construction supervision services construction preservation management services stacked operations marketing services operating rigs management business excluding reimbursable revenue represented less 1 total revenue years ended december 31 2020 2019 2018 respectively years ended december 31 2020 2019 2018 substantial amount revenue countries outside united states consequently exposed risk changes economic political social conditions inherent foreign operations five customers accounted approximately 25 17 14 12 10 consolidated revenue year ended december 31 2020 contract termination revenue petrobras parties accounted approximately 78 consolidated revenue year ended december 31 2019 excluding contract termination revenue received petrobras parties four customers accounted approximately 23 13 11 consolidated revenue year ended december 31 2019 three customers accounted approximately 40 15 14 consolidated revenue year ended december 31 2018 revenues country follows periods representing revenues less 10 included “other countries” 1 “other countries” represent countries revenues representing less 10 total revenues earned property equipment net country follows dates representing property equipment less 10 included “other countries” 1 “other countries” represent countries operate individually property equipment net representing less 10 total property equipment net substantial portion assets mobile drilling units asset locations end period necessarily indicative geographic distribution revenues generated assets periods 12 supplemental quarterly information unaudited following table reflects summary unaudited interim results operations years ended december 31 2020 2019 thousands except per share amounts 1 quarter ended december 31 2019 recorded 16 million 56 million “operating costs” “general administrative expense” respectively cash awards granted certain key employees company pursuant underlying award agreements issued amended 2016 mip also recorded 305 million “general administrative expense” related insurance costs judgment preservation insurance insure contingency required return petrobras payment 2 quarter ended december 31 2020 recorded 50 million “operating costs” bad debt expense representing current estimate credit losses associated “trade receivables” 18 million fuel helicopter costs would otherwise cost customer amounts represent customer’s decision pay us days impacted believe force majeure events would entitled receive payment contract disagree decision evaluating remedies contract earnings loss per share computed independently periods presented therefore sum periods’ earnings loss per share may agree total computed year item 9item 8 financial statements supplementary data report independent registered public accounting firm board directors vantage drilling international audited accompanying consolidated balance sheet vantage drilling international formerly known offshore group investment limited “company” december 31 2016 successor 2015 predecessor related consolidated statements operations shareholders’ equity cash flows periods february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 years ended december 31 2015 2014 predecessor consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement company required engaged perform audit internal control financial reporting audits included consideration internal control financial reporting basis designing audit procedures appropriate circumstances purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audit also includes examining test basis evidence supporting amounts disclosures financial statements assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion discussed note 2 consolidated financial statements upon emerging bankruptcy proceedings february 10 2016 company became new entity financial reporting purposes applied freshstart accounting company’s assets liabilities recorded fair values differed materially previously recorded values result consolidated financial statements periods following application freshstart accounting comparable financial statements previous periods opinion consolidated financial statements referred present fairly material respects financial position vantage drilling international december 31 2016 successor 2015 predecessor results operations cash flows periods february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 years ended december 31 2015 2014 predecessor conformity accounting principles generally accepted united states america bdo usa llp houston texas march 10 2017 vantage drilling international consolidated balance sheet thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement operations thousands except per share data accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement shareholder’s equity thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement cash flows thousands accompanying notes integral part consolidated financial statements vantage drilling international notes consolidated financial statements 1 organization recent events vantage drilling international “company” “vdi” cayman islands exempted company international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused primarily international markets additionally drilling units owned others provide construction supervision services construction preservation management services stackedthe company previously known offshore group investment limited changed corporate name vantage drilling international effective february 11 2016 restructuring agreement bankruptcy proceedings chapter 11 december 1 2015 “petition date” vantage drilling company “vdc” former parent company entered restructuring support agreement “restructuring agreement” majority secured creditors pursuant terms restructuring agreement company agreed pursue prepackaged plan reorganization “reorganization plan” chapter 11 title 11 united states bankruptcy code vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange 615 million promissory note “vdc note” transaction involved reorganization entities common control reflected consolidated financial statements carryover basis retrospective basis effective company’s emergence bankruptcy february 10 2016 “effective date” vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new ordinary shares reorganized company “new shares” accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date december 3 2015 company certain subsidiaries certain vdc subsidiaries guarantors company’s prebankruptcy secured debt filed reorganization plan united states bankruptcy court district delaware vantage drilling international fka offshore group investment limited et al case 1512422 january 15 2016 district court delaware confirmed company’s prepackaged reorganization plan company emerged bankruptcy effective date following table summarizes components lstc included predecessor consolidated balance sheet december 31 2015 thousands pursuant terms reorganization plan term loans senior notes retired effective date issuing debtholders 4344959 units reorganized company “units” unit securities originally consisting one new share 17261 principal company’s 112 stepup senior secured third lien convertible notes due 2030 “convertible notes” subject adjustment upon payment interest kind certain cases redemption conversion convertible notes well share splits share dividends consolidation reclassification new shares pursuant reorganization plan every 1000 principal note holder received 1722798 units 2017 term loan 1725087 units 2019 term loan 1786070 units 75 senior notes 1728569 units 7125 senior notes new shares convertible notes subject terms agreement prohibits new shares convertible notes traded separately convertible notes convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2016 taking account payment pik interest convertible notes 2016 unit consisted one new share 17415 principal convertible notes vantage drilling international notes consolidated financial statementscontinued significant elements reorganization plan included second amended restated credit agreement company’s prepetition credit agreement amended replace 320 million revolving letter credit commitment new 320 million revolving letter credit facility ii repay 150 million outstanding borrowings 70 million cash b issuance 1430 million initial term loans “2016 term loan facility” 10 senior secured second lien notes holders company’s prepetition term loans senior notes claims eligible participate rights offering conducted company 750 million company’s new 10 senior secured second lien notes due 2020 “10 second lien notes” connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes resulting net cash proceeds 739 million deducting cash portion backstop premium vdc note effective company’s emergence bankruptcy vdc’s former equity interest company cancelled immediately following event vdc note converted 655094 new shares accordance terms thereof satisfaction obligation thereunder including accrued interest totaled approximately 626 million date reorganization plan allowed company continue business operations court proceedings maintain operating assets agreements company adequate liquidity prior filing seek debtorinpossession financing trade payables credits wages related obligations unimpaired reorganization plan events july 2015 became aware hamylton padilha brazilian agent vdc used contracting titanium explorer drillship petroleo brasileiro sa “petrobras” entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives mr hsinchi su time alleged bribery scheme member board directors significant shareholder former parent company vdc learned mr padilha’s plea agreement allegations voluntarily contacted us department justice “doj” securities exchange commission “sec” advise developments well fact engaged outside counsel conduct internal investigation allegations internal investigation ongoing cooperating doj sec investigation allegations connection cooperation doj sec advised agencies early 2010 engaged outside counsel investigate report allegations improper payments customs immigration officials asia investigation concluded 2011 determined time disclosure warranted however abundance caution reviewing matter light allegations petrobras matter although cannot predict outcome matter doj sec determine violations us foreign corrupt practices act “fcpa” occurred company could subject civil criminal sanctions including monetary penalties well additional requirements changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payable 2 basis presentation significant accounting policies basis consolidation accompanying consolidated financial information december 31 2016 successor 2015 predecessor periods february 10 2016 december 31 2016 successor january 1 2016 february 10 2016 years ended december 31 2015 2014 predecessor prepared accordance generally accepted accounting principles united states america “us gaap” pursuant rules regulations sec include accounts majority owned subsidiaries significant intercompany transactions accounts eliminated certain previously reported amounts reclassified conform current year presentation connection bankruptcy filing subject provisions financial accounting standards board “fasb” accounting standards codification “asc” 852 reorganizations “asc 852” expenses realized gains losses provisions losses directly associated bankruptcy proceedings classified “reorganization items” consolidated statements operations certain prepetition liabilities subject chapter 11 proceedings considered lstc petition date prior emergence bankruptcy effective date lstc classification distinguished liabilities expected compromised liabilities incurred postpetition vantage drilling international notes consolidated financial statementscontinued asc 852 requires subsequent petition date expenses realized gains losses provisions losses directly associated reorganization business reported separately reorganization items consolidated statements operations required distinguish prepetition liabilities subject compromise postpetition liabilities balance sheet liabilities subject compromise reported amounts expected allowed bankruptcy court even settled lesser amounts result reorganization plan upon emergence bankruptcy effective date adopted freshstart accounting accordance asc 852 resulted company becoming new entity financial reporting purposes upon adoption freshstart accounting assets liabilities recorded fair values effective date effective date fair values assets liabilities differed materially recorded values assets liabilities reflected historical consolidated balance sheets effects reorganization plan application freshstart accounting reflected consolidated financial statements february 10 2016 related adjustments thereto recorded consolidated statements operations reorganization items predecessor period january 1 february 10 2016 result consolidated balance sheets consolidated statement operations subsequent effective date comparable consolidated balance sheets statements operations prior effective date consolidated financial statements related notes presented black line division delineates lack comparability amounts presented february 10 2016 dates prior financial results future periods following application freshstart accounting different historical trends differences may material references “successor” relate company subsequent effective date references “predecessor” refer company prior effective date consolidated financial statements successor prepared assuming company continue going concern contemplate realization assets satisfaction liabilities normal course business addition consolidation majority owned subsidiaries also consolidate variable interest entities “vies” determined primary beneficiary vie determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie certain subsidiaries vdc guarantors prepetition debt part reorganization plan became subsidiaries upon emergence bankruptcy effective date consolidated entities predecessor consolidated financial statements determined vies primary beneficiary following table summarizes net effect consolidating entities predecessor consolidated statement operations cash equivalents includes deposits financial institutions well shortterm money market instruments maturities three months less purchased inventory consists materials spare parts consumables related supplies drilling rigs carried lower average cost market property equipment consists drilling rigs furniture fixtures computer equipment capitalized costs computer software drilling rigs depreciated component basis estimated useful lives ranging five thirtyfive years straightline basis date placed service assets depreciated upon placement service estimated useful lives ranging three seven years straightline basis assets sold retired otherwise disposed cost related accumulated depreciation removed accounts gain loss recognized vantage drilling international notes consolidated financial statementscontinued evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would represent excess asset’s carrying value estimated fair value 2014 rapid significant decline oil prices coupled steep capital budget cuts exploration production companies significant number newbuild ultradeepwater floaters jackups deliveries scheduled triggering events required us undertake analysis recoverability carrying value drilling rigs results analysis indicated estimated undiscounted future cash flows exceeded carrying values drilling rigs connection adoption freshstart accounting upon emergence bankruptcy february 10 2016 adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value projections assumptions used valuation changed significantly yearend accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable interest costs amortization debt financing costs related financings drilling rigs capitalized part cost construction prior commencement vessel’s first contract capitalize interest reported periods debt financing costs incurred debt financings deferred amortized term related financing facility straightline basis approximates interest method debt issuance costs related recognized debt liability presented consolidated balance sheet direct deduction carrying amount debt liability revenue recognized services performed based contracted dayrates number operating days period connection customer contract may receive lumpsum fees mobilization equipment personnel demobilization equipment personnel upon completion mobilization fees received costs incurred mobilize rig one geographic market another deferred recognized straightline basis term contract excluding option periods costs incurred mobilize rig without contract expensed incurred fees lumpsum payments received capital improvements rigs deferred amortized income term related drilling contract costs capital improvements capitalized depreciated useful lives assets upon completion drilling contracts demobilization fees received recorded revenue record reimbursements customers rebillable costs expenses revenue related direct costs operating expenses rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense concentrations credit risk financial instruments potentially subject us significant concentration credit risk consist primarily cash equivalents restricted cash accounts receivable maintain deposits federally insured financial institutions excess federally insured limits monitor credit ratings concentration risk financial institutions continuing basis safeguard cash deposits limited number key customers primarily large international oil gas operators national oil companies international oil gas companies contracts provide monthly billings services performed monitor compliance contract payment terms ongoing basis outstanding receivables beyond payment terms promptly investigated discussed specific customer allowance doubtful accounts trade receivables december 31 2016 2015 use estimates preparation financial statements accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period actual results could differ estimates fair value financial instruments fair value shortterm financial assets liabilities approximates carrying amounts represented balance sheet principally due shortterm nature floating rate nature instruments december 31 2016 fair value 2016 term loan facility 10 second lien notes convertible notes approximately 1384 million 685 million 4193 million respectively based quoted market prices level 1 measurement vantage drilling international notes consolidated financial statementscontinued december 31 2015 fair value 7125 senior notes 75 senior notes approximately 157 million 235 million respectively based quoted market prices level 1 measurement prepetition notes classified lstc december 31 2015 discharged reorganization plan effective date recent accounting standards may 2014 fasb issued asu 201409 revenue contracts customers asu 201409 supersedes existing revenue recognition requirements us gaap including industryspecific guidance asu based principle revenue recognized entity transfers promised goods services customers amount reflects consideration entity expects entitled exchange goods services new standard also requires significant additional disclosures regarding nature amount timing uncertainty revenue cash flows arising contracts customers asu 201409 effective annual reporting periods beginning december 15 2017 interim periods within years using either full modified retrospective application approach currently evaluating provisions asu 201409 assessing impact may financial position results operations part assessment work todate liaised contract drilling industry association industrywide position begun contract review evaluation january 2016 fasb issued asu 201601 financial instrumentsoverall recognition measurement financial assets financial liabilities affects accounting equity investments financial liabilities fair value option presentation disclosure requirements financial instruments additionally standard clarifies guidance related valuation allowance assessment recognizing deferred tax assets resulting unrealized losses availableforsale debt securities asu 201601 effective fiscal years beginning december 15 2017 completed evaluation asu 201601 yet determined impact financial statements related disclosures impact expected material february 2016 fasb issued asu 201602 leases topic 842 amendments fasb accounting standards codification increase transparency comparability among organizations recognizing lease assets liabilities balance sheet disclosing key information leasing arrangements amendments lessees required recognize lease assets lease liabilities leases classified operating leases asc 840 asu 201602 effective financial statements issued fiscal years beginning december 15 2018 early adoption permitted currently evaluating provisions asu 201602 assessing impact may consolidated financial statements related disclosures part assessment work todate liaised contract drilling industry association developing industrywide approach march 2016 fasb issued asu 201609 compensation stock compensation topic 718 pronouncement issued simplify accounting sharebased payment transactions including income tax consequences classification awards either equity liabilities classification statement cash flows asu 201609 effective reporting periods beginning december 15 2016 early adoption permitted guidance must adopted period adopted asu 201609 third quarter 2016 connection adoption amended restated 2016 management incentive plan “2016 amended mip” impact financial statements outstanding share awards adoption date june 2016 fasb issued asu 201613 financial instruments credit losses topic 326 asu 201613 issued provide decisionuseful information expected credit losses financial instruments changes loss impairment methodology asu 201613 effective reporting periods beginning december 15 2019 using modified retrospective adoption method prospective transition approach required debt securities otherthantemporary impairment recognized effective date evaluating provisions asu 201613 yet determined impact financial position results operations cash flows august 2016 fasb issued asu 201615 classification certain cash receipts cash payments addresses classification presentation eight specific cash flow issues currently result diverse practice asu 201615 effective fiscal years beginning december 15 2017 utilizing retrospective transition approach early adoption permitted provided amendments adopted period completed evaluation asu 201615 yet determined impact financial statements related disclosures 3 freshstart accounting upon emergence bankruptcy adopted freshstart accounting accordance asc 852 qualified freshstart accounting reorganization value assets immediately prior confirmation less postpetition liabilities allowed claims ii holders existing voting shares predecessor company received less 50 voting shares postemergence successor entity vantage drilling international notes consolidated financial statementscontinued reorganization value reorganization value represents fair value successor’s total assets intended approximate amount willing buyer would pay assets immediately restructuring freshstart accounting allocated reorganization value individual assets based estimated fair values reorganization value derived estimate enterprise value enterprise value represents estimated fair value entity’s long term debt shareholders’ equity estimated enterprise value company approximately 9542 million represented management’s best estimate fair value effective date value contemplated bankruptcy court confirmation reorganization plan extensive negotiations among company creditors estimated enterprise value adding cash plus estimated fair values company’s nondebt liabilities intended approximate reorganization value reconciliation reorganization value provided table reorganization value enterprise value estimated using numerous projections assumptions inherently subject significant uncertainties resolution contingencies beyond control accordingly estimates set forth herein necessarily indicative actual outcomes assurance estimates projections assumption realized order estimate enterprise value company used discounted cash flow methodology discounted cash flow analysis estimates value business calculating present value expected future unlevered aftertax free cash flows generated business analysis supported comparison indicated values resulting use valuation techniques including comparison financial multiples implied estimated enterprise value range multiples publicly held companies similar characteristics ii analysis comparable valuations indicated precedent mergers acquisitions companies financial projections used estimate expected future unlevered aftertax free cash flows based 5year forecast projections prepared management based number estimates including various assumptions regarding anticipated future performance company industry performance general business economic conditions matters many beyond control discounted cash flow method also includes assumptions weighted average cost capital “discount rate” well estimate residual growth rate used determine enterprise value represented time period beyond 5year plan discount rate calculated using capital asset pricing model resulted discount rate 152 estimated residual growth rate developed considering longterm economic outlook industry geographical regions company operates resulted estimated rate 20 vantage drilling international notes consolidated financial statementscontinued consolidated balance sheet adjustments set forth following condensed consolidated balance sheet reflect effect consummation transactions contemplated reorganization plan reflected column “reorganization adjustments” well fair value adjustments result adoption freshstart accounting reflected column “freshstart adjustments” explanatory notes highlight methods used determine fair values amounts assets liabilities well significant assumptions inputs vantage drilling international notes consolidated financial statementscontinued areflects net use cash effective date implementation reorganization plan thousands brepresents issuance new debt connection reorganization plan 1 conversion prepetition revolving credit facility 1430 million 2016 term loan facility ii 70 million cash 2 issuance 761 million new 10 second lien notes rights offering raising net proceeds approximately 739 million backstop premium offering costs 3 issuance 4344959 new shares 7500 million face value convertible notes creflects settlement vdc note issuing 655094 new shares accordance reorganization plan dreflects settlement lstc accordance reorganization plan follows ereflects cumulative impact reorganization adjustments discussed fan adjustment 200 million recorded inventory decrease net book value estimated fair value inventory part original shipyard value adjustment based adjustment decrease value individual drilling rigs see g vantage drilling international notes consolidated financial statementscontinued gan adjustment 20 billion recorded decrease net book value property equipment estimated fair value fair value determined utilizing income approach drilling rigs related rig equipment discounted cash flow method income approach estimates future cash flow asset expected generate future cash flow converted present value equivalent using estimated discount rate components property equipment net february 10 2016 fair value february 10 2016 summarized following table hrepresents adjustments deferred equipment survey inspection costs deferred mobilization costs deferred mobilization revenue estimated fair value ireflects cumulative impact freshstart adjustments discussed 4 reorganization items reorganization items represent amounts incurred subsequent petition date direct result filing reorganization plan comprised following periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 cash payments reorganization items totaled 166 million 73 million respectively vantage drilling international notes consolidated financial statementscontinued 5 debt following emergence bankruptcy debt december 31 2016 february 10 2016 comprised following aggregate scheduled principal maturities debt next five years thereafter follows thousands 1 excludes original issuance discount 1037 million convertible notes financing costs 19 million 10 second lien notes second amended restated credit agreement company entered 2016 term loan facility providing 320 million revolving letter credit facility replace company’s existing 320 million revolving letter credit commitment prepetition credit facility ii 1430 million term loans claims lenders company’s prepetition credit facility converted lenders company’s prepetition credit facility also received 70 million cash reorganization plan obligations 2016 term loan facility guaranteed substantially company’s subsidiaries subject limited exceptions secured first priority basis substantially company’s guarantors’ assets including ship mortgages vessels assignments related earnings insurance pledges capital stock guarantors case subject certain exceptions issued 74 million letters credit december 31 2016 maturity date term loans commitments established 2016 term loan facility december 31 2019 interest payable unpaid principal amount term loan 2016 term loan facility libor plus 65 libor floor 05 initial term loans currently bearing interest 7498 2016 term loan facility quarterly scheduled debt maturities 357500 commenced march 2016 fees payable outstanding face amount letters credit rate per annum equal 550 rate may increased time pursuant terms 2016 term loan facility 2016 term loan facility includes customary representations warranties mandatory prepayments affirmative negative covenants events default including covenants among things restrict granting liens incurrence indebtedness making investments capital expenditures sale conveyance assets including vessels transactions affiliates prepayments certain debt operation vessels 2016 term loan facility also requires company maintain 750 million available cash defined include unrestricted cash equivalents plus undrawn commitments vantage drilling international notes consolidated financial statementscontinued 10 senior secured second lien notes company engaged rights offering 750 million new 10 second lien notes certain holders secured debt claims connection rights offering certain creditors entered “backstop” agreement purchase 10 second lien notes offer fully subscribed premium paid creditors backstop agreement approximately 22 million paid 11 million cash 11 million additional 10 second lien notes resulting total issued amount 761 million 10 second lien notes net cash proceeds approximately 739 million deducting cash portion backstop premium 10 second lien notes issued par fully unconditionally guaranteed except customary release provisions senior secured basis subsidiaries company 10 second lien notes mature december 31 2020 bear interest date issuance rate 10 per year interest outstanding 10 second lien notes payable semiannually arrears commenced june 30 2016 interest computed basis 360day year comprised twelve 30day months 10 second lien notes rank behind 2016 term loan facility collateral indenture 10 second lien notes includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial reports 112 stepup senior secured third lien convertible notes company issued 4344959 new shares 7500 million convertible notes certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes may traded together separately convertible notes mature december 31 2030 convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes includes customary covenants restrict among things granting liens customary events default including among things failure issue securities upon conversion convertible notes december 31 2016 taking account payment pik interest convertible notes 2016 unit securities comprised one new share 17415 principal convertible notes december 31 2016 would required issue approximately 79 million new shares convertible notes converted connection adoption freshstart accounting convertible notes recorded estimated fair value approximately 6031 million difference face value fair value date issuance convertible notes recorded debt discount amortized interest expense expected life convertible notes using effective interest rate method interest convertible notes payable semiannually arrears commencing june 30 2016 payment kind either increase outstanding principal amount convertible notes company unable increase principal amount issuance additional convertible notes interest computed basis 360day year comprised twelve 30day months rate 1 per annum first four years increasing 12 per annum maturity successor period pik interest totaled 67 million increased outstanding principal amount convertible notes company’s obligations convertible notes fully unconditionally guaranteed except customary release provisions senior secured basis subsidiaries company obligations company guarantors secured liens substantially respective assets guarantees company’s subsidiaries convertible notes joint several company independent assets operations apart assets operations whollyowned subsidiaries addition significant restrictions company’s subsidiary guarantor’s ability obtain funds subsidiaries dividend loan indenture convertible notes includes customary covenants restrict granting liens customary events default including among things failure issue securities upon conversion convertible notes addition indenture applicable collateral agreements provide capital stock securities guarantors excluded collateral extent pledge capital stock securities secure convertible notes would cause guarantor required file separate financial statements sec pursuant rule 316 regulation sx effect time convertible notes convert prior third anniversary issue date february 10 2016 upon instruction holders majority principal amount convertible notes ii upon full final resolution potential investigation claims defined determined good faith board directors company “board” determination shall require affirmative vote supermajority nonmanagement directors b february 10 2019 maturity date december 31 2030 upon approval board approval shall require affirmative vote supermajority nonmanagement directors purposes “supermajority nonmanagement directors” means five affirmative votes nonmanagement directors assuming six nonmanagement directors eligible vote circumstances affirmative vote least 75 nonmanagement directors eligible vote ii “investigation claim” means claim held united states brazilian governmental unit arising related procurement vantage drilling international notes consolidated financial statementscontinued certain agreement provision drilling services dated february 4 2009 petrobras venezuela investments services bv vantage deepwater company amended modified supplemented novated time event change control holders convertible notes right require us repurchase part convertible notes price equal 101 principal amount assessed prepayment requirements concluded feature met criteria considered embedded derivative must bifurcated separately valued fair value due discount convertible notes issuance considered probabilities change control occurring determined derivative de minimis value february 10 2016 december 31 2016 respectively upon occurrence specified change control events certain losses vessels agreements governing 10 second lien notes convertible notes 2016 term loan facility required offer repurchase repay case events losses vessels amount proceeds received event loss outstanding debt agreements prices upon terms set forth applicable agreements addition connection certain asset sales required offer repurchase repay outstanding debt set forth applicable debt agreements addition connection investigation doj sec determine violations fcpa occurred company could subject civil criminal sanctions including monetary penalties become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payable vantage drilling international notes consolidated financial statementscontinued 6 shareholder’s equity 50000000 authorized ordinary shares par value 0001 per share upon emergence bankruptcy issued 5000053 ordinary shares connection settlement lstc vdc note december 31 2016 5000053 ordinary shares issued outstanding december 31 2015 company 100 owned subsidiary vdc equity incentive plans vdc 2007 longterm incentive plan timevested performance units awarded officers employees company related share compensation expense recognized outstanding share awards december 31 2015 cancelled due vdc’s liquidation filing cayman islands recognized share compensation expense allocated vdc 58 million 79 million years ended december 31 2015 2014 respectively august 9 2016 company adopted 2016 amended mip align interests participants shareholders providing incentive compensation opportunities tied performance company’s equity securities pursuant 2016 amended mip compensation committee may grant employees directors consultants stock options restricted stock restricted stock units awards year ended december 31 2016 granted employees directors 44946 timebased restricted stock units “tbgs” 97749 performancebased restricted stock units “pbgs” 2016 amended mip tbgs vest ratably first four anniversaries effective date however accelerated vesting provided event qualified liquidity event defined “qle” otherwise settlement vested tbgs occurs upon seventh anniversary effective date pbgs contain vesting eligibility provisions tied earlier qle seven years effective date upon occurrence vesting eligibility event number pbgs actually vest dependent achievement predetermined total enterprise value “tev” targets specified grants tbgs pbgs classified liabilities consistent classification underlying securities provisions asc 718 compensation stock compensation remeasured reporting period settled share based compensation expense recognized requisite service period grant date fourth anniversary effective date tbgs seventh anniversary effective date pbgs year ended december 31 2016 recognized approximately 402000 sharebased compensation expense related tbgs december 31 2016 approximately 39 million total unrecognized sharebased compensation expense related tbgs expected recognized remaining weighted average vesting period approximately 32 years share based compensation expense pbgs recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs balance sheet date recognized service period completed year ended december 31 2016 concluded probable tev performance condition would met therefore share based compensation expense recognized pbgs december 31 2016 approximately 94 million total unrecognized sharebased compensation expense related pbgs would recognized part prorata vesting period completed date tev performance condition becomes probable balance recognized remaining vesting period summary restricted unit awards year ended december 31 2016 follows vantage drilling international notes consolidated financial statementscontinued summary status nonvested restricted units december 31 2016 follows 7 income taxes cayman islands entity cayman islands impose corporate income taxes domestic earnings foreign consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes operate multiple countries different legal forms result subject jurisdiction numerous domestic foreign tax authorities well tax agreements treaties among governments tax rates vary jurisdictions tax base rates applied taxes may levied based net profit taxes gross revenues withholding taxes revenue determination income tax expense jurisdiction requires interpretation related tax laws regulations use estimates assumptions regarding significant future events amount timing character deductions permissible revenue recognition methods tax law sources character income tax credits income tax expense may vary substantially one period another result changes tax laws regulations agreements treaties foreign currency exchange restrictions rig movements level operations profitability tax jurisdiction furthermore income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation operating results income tax expense furthermore jurisdictions pay taxes receive benefits certain income expense items including interest expense loss extinguishment debt reorganization expenses writeoff development costs income tax expense benefit relates foreign income taxes consisted following thousands reconciliation statutory effective income tax rates shown deferred income tax assets liabilities recorded expected future tax consequences events recognized financial statements tax returns provide deferred taxes temporary differences financial statements tax bases assets liabilities using enacted tax rates expected apply taxable income vantage drilling international notes consolidated financial statementscontinued temporary differences expected reverse deferred tax assets also provided certain loss tax credit carryforwards valuation allowance established reduce deferred tax assets likely portion deferred tax asset realized increase valuation allowance year included taxes foreign earnings rate table related net loss carry forwards generated year believe likely substantially deferred tax asset realized components net deferred tax assets liabilities follows expect changes tax bases effects loss carryforwards result emergence bankruptcy february 10 2016 december 31 2016 foreign tax loss carry forwards approximately 526 million begin expire 2018 include component income tax provision potential interest penalties related recognized tax contingencies within global operations interest penalties expense 08 million included 2016 income tax expense interest penalties 20 million accrued december 31 2016 vantage drilling international notes consolidated financial statementscontinued reconciliation unrecognized tax benefits amount follows thousands certain jurisdictions taxed preferential tax regimes may require compliance specified requirements sustain tax benefits believe compliance specified requirements continue make reasonable efforts comply however ability meet requirements preferential tax regimes may affected changes laws business operations factors affecting company industry many beyond control periodic tax returns subject examination taxing authorities jurisdictions operate accordance normal statute limitations applicable jurisdiction examinations may result assessments additional taxes resolved authorities courts resolution matters involves uncertainties assurances outcome tax years 2008 forward remain open examination many jurisdictions currently involved several tax examinations jurisdictions operating previously operated information becomes available course examinations may increase decrease estimates tax assessments accruals 8 commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims july 2015 became aware media reports hamylton padilha brazilian agent vdc used contracting titanium explorer drillship petrobras entered plea arrangement brazilian authorities connection role facilitating payment bribes former petrobras executives among things mr padilha provided information brazilian authorities alleged bribery scheme former petrobras executives nobu su time alleged bribery scheme member board directors significant shareholder former parent company vdc learned mr padilha’s plea agreement allegations voluntarily contacted doj sec advise developments well fact engaged outside counsel conduct internal investigation allegations internal investigation ongoing cooperating doj sec investigation allegations connection cooperation doj sec advised agencies early 2010 engaged outside counsel investigate report allegation improper payments customs immigration officials asia investigation concluded 2011 determined time disclosure warranted however abundance caution reviewing matter light allegations petrobras matter although cannot predict outcome matter doj sec determine violations fcpa occurred company could subject civil criminal sanctions including monetary penalties well additional requirements changes business practices compliance programs could material adverse effect business financial condition additionally become subject judgment decree order governmental penalty fine may constitute event default terms secured debt agreements result outstanding debt becoming immediately due payable vantage drilling international notes consolidated financial statementscontinued connection bankruptcy cases two appeals filed relating confirmation reorganization plan specifically january 29 2016 hsin chi su capital filed two appeals united states district court district delaware seeking reversal court’s determination hsin chi su capital standing appear heard bankruptcy cases made record hearing held january 14 2016 ii court’s findings fact conclusions law order approving debtors’ disclosure statement pursuant sections 1125 1126b bankruptcy code b solicitation votes voting procedures c forms ballots ii confirming amended joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors docket 188 entered january 15 2016 appeals consolidated june 14 2016 cannot predict certainty ultimate outcome appeals adverse outcome could negatively affect business results operations financial condition enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options december 31 2016 obligated leases varying expiration dates office space housing vehicles specified operating equipment future minimum annual rentals operating leases initial remaining terms excess one year 26 million 16 million 14 million 12 million 12 million years ending december 31 2017 2018 2019 2020 2021 respectively 21 million aggregate years 2022 thereafter rental expenses period january 1 2016 february 10 2016 period february 10 2016 december 31 2016 approximately 678000 41 million respectively rental expenses years ended december 31 2015 2014 approximately 146 million 152 million respectively december 31 2016 purchase commitments 54 million purchase commitments consist obligations outstanding external vendors primarily related materials spare parts consumables related supplies drilling rigs 9 supplemental financial information prepaid expenses current assets prepaid expenses current assets consisted following property equipment net property equipment net consisted following vantage drilling international notes consolidated financial statementscontinued assets consisted following accrued liabilities accrued liabilities consisted following transactions former parent company consolidated statement operations includes following transactions vdc periods indicated following table summarizes balances payable vdc included consolidated balance sheet periods indicated vantage drilling international notes consolidated financial statementscontinued pursuant terms restructuring agreement company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries continue believe position regarding settlement amounts correct cannot predict ultimate outcome matter legal proceedings parties transpire 10 business segment information aggregate contract drilling operations one reportable segment even though provide contract drilling services different types rigs including jackup rigs drillships different geographic regions operations dependent global oil gas industry rigs relocated based demand services customer requirements customers consist primarily large international oil gas companies national governmentcontrolled oil gas companies international exploration production companies additionally drilling units owned others provide construction supervision services construction preservation management services stacked september 2013 signed agreement supervise manage construction two ultradeepwater drillships third party receive management fees reimbursable costs construction phase two drillships subject maximum amount drillship business represented approximately 26 32 10 24 total revenue periods february 10 2016 december 31 2016 january 1 2016 february 10 2016 years ended december 31 2015 2014 respectively years ended december 31 2016 2015 2014 majority revenue countries outside united states consequently exposed risk changes economic political social conditions inherent foreign operations three customers accounted approximately 58 19 11 consolidated revenue period february 10 2016 december 31 2016 three customers accounted approximately 58 18 14 consolidated revenue period january 1 2016 february 10 2016 three customers accounted approximately 32 25 20 consolidated revenue year ended december 31 2015 four customers accounted approximately 24 18 17 14 consolidated revenue year ended december 31 2014 revenues country follows countries represent countries operate individually operating revenues representing less 10 total revenues earned vantage drilling international notes consolidated financial statementscontinued property equipment net country follows countries represent countries operate individually property equipment net representing less 10 percent total property equipment substantial portion assets mobile drilling units asset locations end period necessarily indicative geographic distribution revenues generated assets periods 11 supplemental quarterly information unaudited following table reflects summary unaudited interim results operations years ended december 31 2016 2015 thousands except per share amounts earnings loss per share computed independently periods presented therefore sum periods’ earnings loss per share may agree total computed year 12 subsequent event vantage drilling international notes consolidated financial statementscontinued february 2017 executed purchase sale agreement third party acquire jack drilling rig related drilling contract 130 million payment 13 million made upon execution agreement remaining 117 million due closing targeted first quarter 2017 item 9item 8 financial statements supplementary data report independent registered public accounting firm board directors vantage drilling international houston texas opinion consolidated financial statements audited accompanying consolidated balance sheets vantage drilling international “company” subsidiaries december 31 2019 2018 related consolidated statements operations shareholders’ equity deficit cash flows three years period ended december 31 2019 related notes collectively referred “consolidated financial statements” opinion consolidated financial statements present fairly material respects financial position company subsidiaries december 31 2019 2018 results operations cash flows three years period ended december 31 2019 conformity accounting principles generally accepted united states america basis opinion consolidated financial statements responsibility company’s management responsibility express opinion company’s consolidated financial statements based audits public accounting firm registered public company accounting oversight board united states “pcaob” required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud company required engaged perform audit internal control financial reporting part audits required obtain understanding internal control financial reporting purpose expressing opinion effectiveness company’s internal control financial reporting accordingly express opinion audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion bdo usa llp served companys auditor since 2014 houston texas march 9 2020 vantage drilling international consolidated balance sheet thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement operations thousands except per share data accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement shareholder’s equity thousands accompanying notes integral part consolidated financial statements vantage drilling international consolidated statement cash flows thousands accompanying notes integral part consolidated financial statements vantage drilling international notes consolidated financial statements 1 organization recent events vantage drilling international cayman islands exempted company together consolidated subsidiaries collectively “company” international offshore drilling company focused operating fleet modern high specification drilling units principal business contract drilling units related equipment work crews primarily dayrate basis drill oil natural gas wells customers fleet drilling units provider offshore contract drilling services major national independent oil natural gas companies focused international markets additionally drilling units owned others provide construction supervision services rigs construction preservation management services rigs stacked operations marketing services operating rigs drilling contract arbitration june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award see “note 9 commitments contingencies” “notes consolidated financial statements” additional details pertaining petrobras agreement petrobras award repurchase offer july 8 2019 commenced offer “repurchase offer” repurchase 750 million 925 first lien notes see “note 6 debt” “notes consolidated financial statements” additional information regarding repurchase offer conversion convertible notes november 18 2019 company announced board directors approved conversion effective december 4 2019 see “note 6 debt” “notes consolidated financial statements” additional information regarding conversion special cash distribution november 18 2019 company announced board directors declared special cash distribution shareholders record december 10 2019 payable december 17 2019 see “note 7 shareholders’ equity deficit” “notes consolidated financial statements” additional information regarding special cash distribution change us tax status january 22 2020 vdi filed tax election irs treated partnership rather corporation us federal income tax purposes effective date retroactive december 9 2019 see “note 8 income taxes” “notes consolidated financial statements” additional information regarding tax election resulting change vdi’s tax status joint venture november 15 2017 vantage ades international holding ltd londonlisted offshore onshore provider oil gas drilling production services middle east africa “ades” subsidiaries entered shareholders’ agreement form entity named advantage provide deepwater drilling services offshore egypt advantage joint venture owned 51 vantage 49 ades commenced drilling services contract dana gas egypt limited “dana gas” may 2019 “egyptian drilling contract” perform deepwater drilling services offshore egypt term egyptian drilling contract one well option extend term three additional wells september 24 2019 dana gas assigned egyptian drilling contract belayim petroleum company “petrobel” joint venture eni egyptian general petroleum corporation pursuant petrobel exercised option egyptian drilling contract extend term one well october 15 2019 advantage became entitled perform drilling services petrobel brazil improbity action april 27 2018 company added additional defendant legal proceeding initiated brazilian federal public prosecutors office located state parana brazil “brazilian federal prosecutor” certain individuals including executive petrobras two political lobbyists connection contracting titanium explorer drillship petrobras drilling contract brazilian government petrobras plaintiffs see “note 9 commitments contingencies” “notes consolidated financial statements” additional details regarding legal proceeding initiated brazilian federal prosecutor 2 basis presentation significant accounting policies basis consolidation accompanying consolidated financial information december 31 2019 2018 years ended december 31 2019 2018 2017 prepared accordance us gaap pursuant rules regulations sec include accounts majority owned subsidiaries vies discussed significant intercompany transactions accounts eliminated addition consolidation majority owned subsidiaries also consolidate vies determined primary beneficiary vie determination primary beneficiary vie based whether entity 1 power direct activities significantly impact economic performance vie 2 obligation absorb losses right receive benefits vie could potentially significant vie determination primary beneficiary vie considers relationships us vie advantage joint venture company formed operate deepwater drilling rigs egypt determined advantage met criteria vie accounting purposes equity risk insufficient permit carry activities without additional subordinated financial support us also determined primary beneficiary accounting purposes since entitled use advantage deepwater drilling contract opportunities rejected ades power direct operating activities associated deepwater drilling rigs activities significantly impact entity’s economic performance b obligation absorb losses right receive majority benefits could potentially significant vie result consolidate advantage consolidated financial statements eliminate intercompany transactions present interests owned us “noncontrolling interests” consolidated balance sheet carrying amount associated advantage follows advantage majority owned subsidiary company serves guarantor indenture relating 925 first lien notes secured first priority lien assets advantage subject certain exceptions creditors’ recourse advantage liabilities advantage limited assets advantage see “note 1 organization recent events” “note 10 supplemental financial information” “notes consolidated financial statements” additional details regarding joint venture use estimates preparation financial statements accordance us gaap requires management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ongoing basis evaluate estimates including related property equipment income taxes insurance employee benefits contingent liabilities actual results could differ estimates cash equivalents includes deposits financial institutions well shortterm money market instruments maturities three months less purchased inventory consists materials spare parts consumables related supplies drilling rigs property equipment consists drilling rigs furniture fixtures computer equipment capitalized costs computer software drilling rigs depreciated component basis estimated useful lives ranging five 35 years straightline basis date placed service assets depreciated upon placement service estimated useful lives ranging three seven years straightline basis assets sold retired otherwise disposed cost related accumulated depreciation removed accounts gain loss included “operating costs” “general administrative” expenses consolidated statement operations depending nature asset years ended december 31 2019 2018 2017 recognized net loss 02 million net gain 13 million net loss 03 million respectively related sale retirement assets evaluate realization property equipment whenever events changes circumstances indicate carrying amount asset may recoverable impairment loss property equipment exists estimated undiscounted cash flows expected result use asset eventual disposition less carrying amount impairment loss recognized would computed excess asset’s carrying value estimated fair value estimates future cash flows require us make longterm forecasts future revenues operating costs regard assets subject review business including utilization rates dayrates receive drilling rigs depends level customers’ expenditures oil natural gas exploration development production expenditures oil natural gas prices customers’ expectations potential changes prices general outlook worldwide economic growth political social stability major oil natural gas producing basins world availability credit changes governmental laws regulations among many factors significantly affect customers’ levels expenditures sustained declines persistent depressed levels oil natural gas prices worldwide rig counts utilization reduced access credit markets reduced depressed sale prices comparably equipped jackups drillships significant adverse economic news could require us evaluate realization drilling rigs connection adoption freshstart accounting upon emergence bankruptcy effective date adjustment 20 billion recorded decrease net book value drilling rigs estimated fair value projections assumptions used valuation changed significantly december 31 2019 accordingly triggering event occurred indicate current carrying value drilling rigs may recoverable interest costs amortization debt financing costs related financings drilling rigs capitalized part cost construction prior commencement vessel’s first contract capitalize interest reported periods intangible assets april 2017 pursuant purchase sale agreement third party completed purchase vantage 260 class 15444c jackup rig related multiyear drilling contract 130 million connection acquisition recorded identifiable intangible asset 126 million fair value acquired favorable drilling contract resulting intangible asset amortized straightline basis twoyear term drilling contract ended april 2019 recognized approximately 16 million 63 million 47 million amortization expense intangible assets years ended december 31 2019 2018 2017 respectively debt financing costs incurred debt financings deferred amortized term related financing facility straightline basis approximates interest method debt issuance costs related recognized debt liability presented consolidated balance sheet direct deduction carrying amount debt liability rig equipment certifications required obtain regulatory certifications operate drilling rigs certain specified equipment must maintain certifications periodic inspections surveys costs associated certifications including drydock costs deferred amortized corresponding certification periods revenue recognition see “note 3 revenue contracts customers” “notes consolidated financial statements” information income taxes income taxes provided based upon tax laws rates effect countries operations conducted income earned deferred income tax assets liabilities computed differences financial statement basis tax basis assets liabilities result future taxable tax deductible amounts based enacted tax laws rates applicable periods differences expected affect taxable income establish deferred tax liabilities certain foreign earnings intend indefinitely reinvest finance foreign activities valuation allowances established necessary reduce deferred income tax assets amount expected realized recognize interest penalties related income taxes component income tax expense concentrations credit risk financial instruments potentially subject us significant concentration credit risk consist primarily cash equivalents restricted cash accounts receivable maintain deposits federally insured financial institutions excess federally insured limits monitor credit ratings concentration risk financial institutions continuing basis safeguard cash deposits limited number key customers primarily large international oil gas operators national oil companies international oil gas companies contracts provide monthly billings services performed monitor compliance contract payment terms ongoing basis payment terms customer invoices typically range 30 45 days outstanding receivables beyond payment terms promptly investigated discussed specific customer allowance doubtful accounts trade receivables december 31 2019 2018 earnings loss per share compute basic diluted eps accordance twoclass method include restricted stock units granted employees contain nonforfeitable rights dividends grants considered participating securities basic earnings loss per share based weighted average number ordinary shares outstanding applicable period diluted eps computed based weighted average number ordinary shares ordinary share equivalents outstanding applicable period potentially dilutive securities converted ordinary shares using treasury stock method following reconciliation number shares used basic diluted eps computations following sets forth number shares excluded diluted eps computations functional currency consider usd functional currency operations since majority revenues expenditures denominated usd limits exposure currency exchange rate fluctuations recognize currency exchange rate gains losses “other net” consolidated statement operations years ended december 31 2019 2018 2017 recognized net gain 02 million net loss 15 million net gain 28 million respectively related currency exchange rates fair value financial instruments fair value shortterm financial assets liabilities approximates carrying amounts represented balance sheet principally due shortterm nature floating rate nature instruments december 31 2019 fair value 925 first lien notes approximately 3404 million based quoted market prices less active market level 2 measurement sharebased compensation tbgs granted 2016 amended mip vest annually ratably four years however accelerated vesting provided event qle otherwise settlement vested tbgs occurs upon seventh anniversary effective date pbgs granted 2016 amended mip contain vesting eligibility provisions tied earlier qle seven years effective date upon occurrence vesting eligibility event number pbgs actually vest dependent achievement predetermined tev targets specified grants tbgs pbgs classified liabilities consistent classification underlying securities prior conversion following conversion outstanding tbgs pbgs subject modification accounting reclassified equity awards provisions asc 718 compensation stock compensation sharebased compensation expense recognized requisite service period grant date fourth year vest date tbgs pbgs expense recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs conversion date convertible notes recognized service period completed seventh anniversary effective date pbgs noncontrolling interest noncontrolling interests represent equity investments minority owner joint venture consolidate financial statements recently adopted accounting standards adopted asu 201602 leases asc 842 january 1 2019 electing initially apply standard modified retrospective basis january 1 2019 restate comparative periods outlined asu 201811 leases targeted improvements accordingly continue report periods prior january 1 2019 financial statements prior guidance outlined asc topic 840 leases new lease standard requires substantially leases recorded balance sheet right use assets lease obligations adoption standard impact consolidated results operations cash flows determined cumulativeeffect adjustment beginning retained earnings consolidated balance sheet addition elected certain practical expedients permit us reassess whether existing contracts contain leases reassess lease classification existing leases reassess initial direct costs existing leases separate lease nonlease components classes underlying assets lessee also made accounting policy election keep leases initial term 12 months less balance sheet classes underlying assets adoption new standard resulted increase company’s assets liabilities approximately 92 million january 1 2019 drilling contracts contain lease component related underlying drilling equipment addition service component provided crews expertise operate drilling equipment outlined asu 201811 determined nonlease service component drilling contracts predominant element combined component continue account combined components single performance obligation topic 606 revenue contracts customers bareboat charter contract soehanah jackup rig considered new lease acquisition date accounted operating lease new standard recently issued accounting standards december 2019 fasb issued asu 201912 “income taxes topic 740 simplifying accounting income taxes” asu simplifies accounting income taxes removing certain exceptions general principles topic 740 also simplifies improves consistent application gaap areas topic 740 clarifying amending existing guidance amendments asu effective fiscal years beginning december 15 2020 interim periods therein early adoption permitted currently evaluating provisions asu 201912 assessing impact may financial position results operations august 2018 fasb issued asu 201815 intangibles goodwill internaluse software asu requires capitalization certain implementation costs incurred cloud computing arrangement service contract amendments asu effective fiscal years beginning december 15 2019 interim periods therein early adoption permitted expect adoption asu materially affect consolidated financial statements june 2016 fasb issued asu 201613 “financial instruments credit losses” asu related asus issued subsequently fasb introduce new model recognizing credit losses financial assets accounted fair value net income including loans debt securities trade receivables net investments leases availableforsale debt securities new asu broadens information entity must consider developing estimates expected credit losses requires entity estimate credit losses life exposure based historical information current information reasonable supportable forecasts adopt standard effective date first quarter 2020 using modified retrospective approach currently expect adoption material impact consolidated financial statements customers primarily international oil companies national oil companies large independent oil companies historically low incidence bad debt expense 3 revenue contracts customers activities primarily drive revenue earned drilling contracts customers include providing drilling rig work crews related equipment services necessary operate rig ii delivering drilling rig mobilizing demobilizing drill site iii performing preoperating activities including rig preparation activities andor equipment modifications required contract integrated drilling services perform drilling contract represents single performance obligation satisfied time comprised series distinct time increments service periods dayrate drilling revenue drilling contracts generally provide payment dayrate basis higher rates periods drilling unit operating lower rates zero rates periods drilling operations interrupted restricted dayrate billed customer determined based varying rates applicable specific activities performed hourly basis dayrate consideration allocated distinct hourly increment relates within contract term therefore recognized perform daily drilling services mobilizationdemobilization revenue connection certain contracts receive lumpsum fees similar compensation mobilization equipment personnel prior commencement drilling services demobilization equipment personnel upon contract completion activities considered distinct within context contract therefore associated revenue allocated overall single performance obligation mobilization fees received prior commencement drilling operations recorded contract liability amortized straightline basis initial contract period demobilization fees expected received upon contract completion estimated contract inception recognized straightline basis initial contract term offset accretive contract asset many contracts demobilization fees contingent upon occurrence nonoccurrence future event estimate revenue may therefore constrained fees received mobilization demobilization equipment personnel included contract drilling revenues capital upgradecontract preparation revenue connection certain contracts receive lumpsum fees similar compensation requested capital upgrades drilling rigs contract preparation work activities considered distinct within context contract therefore fees received recorded contract liability amortized contract drilling revenues straightline basis initial contract term contract termination revenue june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award see “note 9 commitments contingencies” “notes consolidated financial statements” additional information regarding petrobras agreement petrobras award year ended december 31 2019 recognized approximately 5940 million “contract termination revenue” 1069 million “interest income” associated petrobras payments defined “note 9 commitments contingencies” “notes consolidated financial statements” revenues related reimbursable expenses generally receive reimbursements customers purchase supplies equipment personnel services provided request accordance drilling contract agreement generally considered principal transactions therefore recognize reimbursable revenues corresponding costs provide customerrequested goods services elected exclude transaction price measurement taxes assessed governmental authority disaggregation revenue following tables present revenue disaggregated revenue source periods indicated dayrate revenue amortized revenue “jackups” “deepwater” included within “contract drilling services” consolidated statement operations revenue excluding “contract termination revenue” included within “reimbursables other” consolidated statement operations accounts receivable contract liabilities contract costs accounts receivable recognized right consideration becomes unconditional based upon contractual billing schedules payment terms customer invoices typically range 30 45 days recognize contract liabilities recorded “other current liabilities” “longterm liabilities” consolidate balance sheet prepayments received customers deferred revenue received mobilization contract preparation capital upgrades certain direct incremental costs incurred contract preparation initial mobilization modifications contracted rigs represent contract fulfillment costs relate directly contract enhance resources used satisfy performance obligations future expected recovered costs deferred current noncurrent asset depending length initial contract term amortized straightline basis operating costs services rendered initial term related drilling contract costs incurred capital upgrades capitalized depreciated useful life asset costs incurred demobilization rigs contract completion recognized incurred demobilization process costs incurred mobilize rig without contract expensed incurred following table provides information contract cost assets contract revenue liabilities contracts customers significant changes contract cost assets contract revenue liabilities year ended december 31 2019 follows 1 expect recognize contract revenues approximately 50 million 2020 related unsatisfied performance obligations existing december 31 2019 elected utilize optional exemption permits us exclude disclosure estimated transaction price related variable portion unsatisfied performance obligations end reporting period transaction price based single performance obligation consisting series distinct hourly increments variability resolved time future services 4 acquisitions june 13 2018 entered share purchase agreement ship finance international limited acquire shares rig finance limited entity owns soehanah jackup rig baker marine pacific class 375 jackup rig related bareboat charter rig finance limited party 846 million subject certain adjustments working capital liabilities entity discharged acquisition date made payment 150 million connection execution share purchase agreement remaining 696 million paid closing december 31 2018 may 2019 parties bareboat charter terminated charterer’s right acquire rig end term bareboat charter accounted acquisition asset purchase accordance accounting guidance considering substantially fair value gross assets acquired concentrated soehanah jackup rig inplace lease intangible using cost accumulation model cost acquisition allocated assets acquired follows 1 including 04 million transaction costs pro forma results operations related acquisition material consolidated statement operations april 2017 pursuant purchase sale agreement third party completed purchase class 15444c jackup rig related multiyear drilling contract 130 million payment 13 million made february 2017 upon execution agreement remaining 117 million paid closing august 2017 substituted sapphire driller baker marine pacific class 375 jackup rig fulfill drilling contract rig renamed vantage 260 classified held sale acquisition sold february 26 2018 51 million accounted acquisition vantage 260 business combination accordance accounting guidance required among things allocate purchase price assets acquired liabilities assumed based fair values acquisition date following table provides estimated fair values assets acquired liabilities assumed accounting guidance bargain purchase gain results acquisition fair value purchase consideration paid connection acquisition less net fair value assets acquired liabilities assumed recorded bargain purchase gain approximately 19 million related acquisition year ended december 31 2017 believe able negotiate bargain purchase price result operational presence west africa seller’s liquidation purchase vantage 260 related twoyear drilling contract allowed reactivation sapphire driller extended operational presence west africa pro forma results operations related acquisition presented material consolidated statement operations acquisitionrelated costs material expensed incurred 5 leases operating leases expiring various dates principally office space onshore storage yards certain operating equipment additionally sublease certain office space third parties determine arrangement lease inception operating leases initial term greater 12 months included “operating lease rou assets” “other current liabilities” “other longterm liabilities” consolidated balance sheet operating lease rou assets operating lease liabilities recognized based present value future lease payments lease term commencement date leases provide implicit rate use incremental borrowing rate based information available commencement date determining present value future payments operating lease rou asset also includes lease payments made prior commencement date reduced lease incentives received initial direct costs incurred lease terms may include options extend terminate lease reasonably certain exercise option lease expense recognized straightline basis lease term lease agreements lease nonlease components generally accounted separately certain leases include provisions variable payments variable payments included calculation lease liability rou assets components lease expense follows 1 shortterm lease costs 25 million year ended december 31 2019 operating cash flows used operating leases approximates lease expense december 31 2019 maturities lease liabilities follows december 31 2019 weighted average discount rate weighted average remaining lease term operating leases 925 27 years respectively rou assets lease liabilities recorded leases commencing three months ended december 31 2019 02 million december 31 2018 maturities lease liabilities presented asc topic 840 follows bareboat charter contract soehanah jackup rig accounted operating lease charter revenue included “reimbursables other” consolidated statement operations may 2019 parties bareboat charter terminated charterer’s right acquire rig end term bareboat charter ended december 31 2019 please refer “note 4 acquisitions” “notes consolidated financial statements” additional information pertaining acquisition soehanah jackup rig 6 debt composed following aggregate scheduled principal maturities debt next five years thereafter follows thousands 1 excludes financing costs 64 million 925 first lien notes 925 first lien notes november 30 2018 company issued 3500 million aggregate principal amount 925 first lien notes private placement 925 first lien notes issued par fully guaranteed senior secured basis company’s direct indirect subsidiaries secured first priority lien substantially assets company subsidiaries case subject certain exceptions 925 first lien notes subject first payment priority favor holders 500 million future superpriority debt subject mandatory optional redemption provisions 925 first lien notes mature november 15 2023 bear interest date issuance rate 925 per year interest computed basis 360day year comprised twelve 30day months payable semiannually arrears commencing may 15 2019 indenture 925 first lien notes includes customary covenants events default including covenants among things restrict granting liens restrict making investments restrict incurrence indebtedness conveyance vessels limit transactions affiliates require company provide periodic financial reports net proceeds issuance used repay obligations 2016 term loan facility terminate credit agreement governing facility ii redeem outstanding 10 second lien notes iii fund remaining amounts paid connection purchase soehanah jack rig iv pay fees expenses related foregoing offering 925 first lien notes v general corporate purposes concurrently issuance 925 first lien notes entered new letter credit facility replace letter credit facility existing 2016 term loan facility new facility capacity 500 million outstanding letters credit cash collateralized issued 101 million letters credit facility december 31 2019 july 8 2019 commenced offer repurchase 750 million 925 first lien notes purchase price equal 1000 principal 925 first lien notes repurchased plus accrued unpaid interest additional amounts including date fixed purchase 925 first lien notes tendered pursuant offer purchase cash made pursuant terms indenture governing 925 first lien notes connection receipt subsidiaries vdeep vddi approximately 6908 million 101 million respectively june 21 2019 account petrobras award accordance indenture governing 925 first lien notes required offer purchase least 750 million 925 first lien notes accordance terms thereof 925 first lien notes tendered purchase offer expiration date accordingly company concluded obligation indenture conduct offer accordance terms indenture proceeds petrobras agreement net direct costs relating recovery thereof available use company without restrictions indenture convertible notes part reorganization plan company issued 4344959 new shares 7500 million convertible notes certain creditors holding approximately 25 billion prepetition secured debt claims new shares issued creditors convertible notes could traded together separately convertible notes mature december 31 2030 convertible new shares certain circumstances conversion price subject adjustment accordance terms indenture convertible notes 9560 issue date indenture convertible notes included customary covenants restricted among things granting liens customary events default including among things failure issue securities upon conversion convertible notes june 7 2019 company announced board directors approved conversion convertible notes ordinary shares company take effect promptly practicable july 1 2019 subject satisfaction certain conditions required indenture governing convertible notes company announced july 18 2019 light petrobras agreement petrobras parties certain company’s subsidiaries board directors decided reevaluate whether best interests company shareholders proceed conversion point time action undertaken company time proceed conversion november 18 2019 company announced board directors authorized conversion december 4 2019 outstanding principal amount approximately 7758 million converted outstanding ordinary shares rate approximately 001046 equates one ordinary share per 9560 principal amount convertible notes 7 shareholders’ equity deficit stock issuance vdi 50000000 authorized ordinary shares upon emergence bankruptcy effective date vdi issued 5000053 ordinary shares connection settlement lstc accordance reorganization plan vdc note december 4 2019 vdi issued additional 8114977 ordinary shares convert outstanding convertible notes see “note 6 debt” “notes consolidated financial statements” additional information regarding conversion december 31 2019 13115026 ordinary shares issued outstanding special cash distribution november 18 2019 company announced board directors declared special cash distribution aggregate amount 5250 million 4003 per share paid december 17 2019 shareholders record close business december 10 2019 “special cash distribution” special cash distribution use proceeds petrobras award company bound judgment preservation insurance insure contingency required return petrobras payment see note 9 commitments contingencies “notes consolidated financial statements” additional information petrobras award petrobras payment sharebased compensation august 9 2016 company adopted amended 2016 mip align interests participants shareholders providing incentive compensation opportunities tied performance company’s equity securities pursuant 2016 amended mip compensation committee may grant employees directors consultants stock options restricted stock restricted stock units awards december 31 2019 262456 shares available future grant amended 2016 mip tbgs granted 2016 amended mip vest annually ratably four years however accelerated vesting provided event qle otherwise settlement vested tbgs occurs upon seventh anniversary effective date pbgs granted 2016 amended mip contain vesting eligibility provisions tied earlier qle seven years effective date upon occurrence vesting eligibility event number pbgs actually vest dependent achievement predetermined tev targets specified grants awards granted employees company year ended december 31 2019 time period three members board directors granted total 1282 tbgs year ended december 31 2018 1030 tbgs 2403 pbgs granted single employee company period four members board directors granted 300 tbgs total 1200 tbgs prior conversion tbgs pbgs classified liabilities consistent classification underlying securities following conversion outstanding tbgs pbgs subject modification accounting reclassified equity awards connection conversion restricted stock unit converted approximately 2868 company common shares pershare average fair value 6626 additional compensation costs recognized conversion change terms affecting estimate fair value pursuant amended 2016 mip terms applicable unit awards participants holding restricted stock units contractually entitled receive dividends distributions paid vdi stockholders provided dividends subject vesting requirements underlying units dividend payments accrue outstanding awards vested unvested form “dividend equivalents” equal dividend per share underlying applicable mip award result special cash distribution discussed “note7 shareholders’ equity deficit” “notes consolidated financial statements” 58 million recorded “other longterm liabilities” consolidated balance sheet paid settlement tbgs outstanding tbgs pbgs subject modification accounting result special cash distribution discussed “note7 shareholders’ equity deficit” “notes consolidated financial statements” additional compensation costs recognized result special cash distribution change terms affecting estimate fair value years ended december 31 2019 2018 2017 recognized sharebased compensation related tbgs approximately 10 million 72 million 40 million respectively december 31 2019 approximately 24 million total unrecognized sharebased compensation expense related tbgs expected recognized remaining weighted average vesting period approximately 09 years total award date value time vested restricted shares vested year ended december 31 2019 approximately 22 million sharebased compensation expense pbgs recognized probable tev targets met probable performance condition met compensation expense based fair value pbgs conversion date recognized service period completed december 31 2019 concluded probable tev performance condition would met therefore sharebased compensation expense recognized pbgs remaining weighted average vesting period approximately 31 years summary status nonvested restricted units december 31 2019 changes year ended december 31 2019 follows 1 due conversion discussed “note 6 debt” “notes consolidated financial statements” outstanding tbgs pbgs cancelled reissued fair value ordinary shares time conversion 8 income taxes vdi cayman islands corporation operating multiple countries subsidiaries cayman islands impose corporate income taxes consequently calculated income taxes based laws tax rates effect countries operations conducted subsidiaries considered resident income tax purposes income taxes generally dependent upon results operations generate significant revenues jurisdictions income tax liability based gross revenues asset values correlation net operating results income tax expense furthermore jurisdictions pay taxes pay taxes lower rates receive benefits certain income expense items including interest expense loss extinguishment debt gains losses disposal transfer assets reorganization expenses writeoff development costs january 22 2020 vdi filed tax election irs treated partnership rather corporation us federal income tax purposes effective date retroactive december 9 2019 result us holders required take account allocable share items income gain loss deduction credit vdi taxable year vdi ending within us holder’s taxable year regardless whether distribution received vdi item generally character source either us foreign though us holder realized item directly anticipate vdi’s change tax status material impact consolidated financial statements income tax expense benefit consisted following thousands reconciliation statutory effective income tax rates shown components net deferred tax assets liabilities follows december 31 2019 foreign tax loss carry forwards approximately 74 million expire beginning 2020 decrease foreign tax loss carry forwards current year primarily due expiry carryforward period available certain jurisdictions resulting decline valuation allowance current year include component income tax provision potential interest penalties related recognized tax contingencies within global operations interest penalties expense approximately 03 million included 2019 income tax expense total interest penalties approximately 17 million accrued december 31 2019 reconciliation unrecognized tax benefits amount excluding interest penalties recognize component income tax expense follows thousands periodic tax returns subject examination taxing authorities jurisdictions operate accordance normal statute limitations applicable jurisdiction examinations may result assessments additional taxes resolved authorities courts resolution matters involves uncertainties assurances outcome tax years 2010 onward remain open examination many jurisdictions currently involved several tax examinations jurisdictions operating previously operated information becomes available course examinations may increase decrease estimates tax assessments accruals 9 commitments contingencies subject litigation claims disputes ordinary course business may covered insurance inherent risk litigation dispute assurance given outcome claims matters related reorganization plan connection bankruptcy cases two appeals filed relating confirmation reorganization plan specifically january 29 2016 mr hsinchi su capital filed two appeals delaware federal court seeking reversal court’s determination mr hsinchi su capital standing appear heard bankruptcy cases made record hearing held january 14 2016 ii court’s findings fact conclusions law order approving debtors’ disclosure statement pursuant sections 1125 1126b bankruptcy code b solicitation votes voting procedures c forms ballots ii confirming amended joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors docket 188 entered january 15 2016 appeals consolidated june 14 2016 june 21 2019 delaware federal court rendered decision affirming us bankruptcy court’s confirmation order relating reorganization plan mr hsinchi su capital file subsequent appeal delaware federal court’s decision within prescribed period time order delaware federal court constitutes final nonappealable order therefore foregoing matter closed january 10 2019 mr hsinchi su company capital filed declaratory action us delaware federal court seeking ruling court confirmation reorganization plan prevent mr hsinchi su capital suing company certain unspecified claims based theory fraud alleged valued excess 20 billion march 4 2019 filed motion dismiss delaware federal court mr hsinchi su capital filed response subsequently filed reply november 19 2019 delaware federal court issued decision refusing rule motion dismiss referring matter us bankruptcy court presided reorganization proceedings december 3 2019 renewed motion us bankruptcy court dismiss action january 6 2020 us bankruptcy court granted motion dismiss action su capital mr hsinchi su capital file subsequent appeal us bankruptcy court’s decision within prescribed period time order us bankruptcy court constituted final nonappealable order therefore foregoing matter closed drilling contract arbitration august 31 2015 pai pvis subsidiaries petrobras notified company termination drilling contract pvis vdeep novated pai vddi claiming company breached obligations drilling contract vdeep vddi whollyowned subsidiaries company immediately filed international arbitration claim petrobras parties claiming wrongful termination drilling contract july 2 2018 international arbitration tribunal issued award favor vdeep vddi tribunal found petrobras parties breached drilling contract awarded vdeep vddi damages aggregate amount 6220 million petrobras parties dismissed petrobras parties’ counterclaims company prejudice tribunal also awarded company interest foregoing award amount annual rate 152 compounded monthly accrue april 1 2018 respect 6156 million thereof ii october 20 2015 respect 52 million thereof iii november 19 2015 respect 12 million thereof case final payment petrobras award accordance terms petrobras award company petrobras bore legal fees expenses tribunal including compensation arbitrators aggregating approximately 15 million borne equally sides july 2 2018 vdeep vddi filed petition “petition” us district court texas confirm petrobras award petrobras parties august 31 2018 petrobras parties filed us district court texas among things response petition motion vacate petrobras award “response motion vacate” march 8 2019 us district court texas heard petition response motion vacate may 20 2019 us district court texas granted petition confirm petrobras award petrobras parties denied petrobras parties’ motion vacate petrobras award may 22 2019 us district court texas rendered final judgment favor vdeep vddi amount approximately 7340 million separately connection enforcing petrobras award petrobras parties vdeep vddi secured order amsterdam district court netherlands august 22 2018 froze certain assets petrobras pvis netherlands believe valued excess claim time november 15 2018 vdeep vddi filed petition court appeals hague netherlands recognize enforce petrobras award petrobras parties netherlands “dutch enforcement action” march 1 2019 petrobras parties filed statement defense court appeals court appeals heard petition vdeep vddi petrobras parties’ statement defense may 14 2019 june 20 2019 vdeep vddi entered petrobras agreement petrobras parties relating petrobras award petrobras agreement considered petrobras award amount together interest calculated may 22 2019 reduced amount 45 pursuant petrobras agreement pvis agreed pay vdeep 690810875 pai agreed pay vddi 10128565 collectively “petrobras payments” full satisfaction payment petrobras award related judgement entered us district court texas confirming petrobras award “judgment” neither party released claims except certain claims respect certain prejudgement attachments made vdeep vddi certain assets pvis petrobras netherlands vdeep vddi received petrobras payments full june 21 2019 petrobras parties filed notice appeal us court appeals fifth circuit seeking reversal judgment confirmed petrobras award denied motion vacatur believe basis reversal intend vigorously contest appeal petrobras agreement vdeep vddi required take actions order release liens certain petrobras assets united states netherlands addition parties agreed petrobras agreement stay dutch enforcement action time final nonappealable judgment us proceedings time petrobras parties assert claim reimbursement part petrobras payments whichever earlier light retention petrobras parties rights including right appeal judgment petrobras parties may assert claim return portion petrobras payments made satisfy petrobras award event us judgment overturned appeal company provide assurances ultimate outcome appeals furthermore company obtained judgment preservation insurance insure contingency required return petrobras payment extent petrobras parties ultimately succeed appeal petrobras award company’s consolidated financial position results operations could materially adversely affected see “risk factorswe may prevail defense appeal petrobras award result appeal may ultimately require us return portion petrobras payments made satisfy petrobras award” part item 1a annual report addition petrobras payments received vdeep vddi subject reductions due currently owed future legal fees including among others contingency fee equal 10 petrobras payments applicable taxes accordingly assurances given amount petrobras payments ultimately realized company time believe likelihood would incur loss related matter remote december 31 2019 amounts accrued brazil improbity action april 27 2018 company added additional defendant legal proceeding initiated brazilian federal prosecutor certain individuals including executive petrobras two political lobbyists connection contracting titanium explorer drillship petrobras drilling contract brazilian government petrobras plaintiffs vantage alleged involved benefitted purported bribery scheme petrobras hamylton padilha brazilian agent former parent company vdc used contracting titanium explorer drillship petrobras mr hsin chi su former member vdc’s board directors significant shareholder vdc first became aware legal proceeding july 19 2018 previously seal march 22 2019 formally served united states april 12 2019 filed preliminary statement defense 11th federal court judicial branch curitiba state parana brazil “brazilian federal court” company understands legal proceeding called improbity action civil action part brazilian federal prosecutor’s larger “car wash” investigation money laundering corruption allegations petrobras damages claimed proceeding amount brl 1028 million approximately 310 million together civil fine equal three times amount company understands brazilian court hearing proceeding issued order authorizing seizure freezing assets company three defendants legal proceeding precautionary measure amount approximately 1240 million company three defendants jointly severally liable amount seizure order effect company’s assets operations company assets brazil currently intend relocate assets brazil february 13 2019 learned brazilian federal prosecutor requested mutual legal assistance us doj pursuant united nations convention corruption 2003 obtain freezing order company’s us assets amount 1240 million company believes request supported applicable law intends vigorously oppose defend attempts seize assets april 12 2019 filed interlocutory appeal 4th circuit federal court appeals porto alegre state rio grande sul brazil “brazilian appellate court” appellate court hearing appeals “car wash” cases stay seizure freezing order brazilian federal court may 20 2019 company announced brazilian appellate court ruled favor company’s appeal stay seizure freezing order brazilian federal court foregoing ruling still subject confirmation threejudge panel subject appeal company offer assurances stay confirmed outcome appeal thereof company communicated brazilian appellate court’s ruling doj asked brazilian federal court july 18 2019 company announced brazilian government made filing brazilian federal court reporting doj advised brazilian ministry justice would possible doj comply mutual assistance request respect asset freeze order company also announced learned brazilian ministry justice doj’s response request mutual assistance stated legal grounds existed implementing requested asset freeze doj returning request without taking action considers matter concluded company intends vigorously defend allegations made underlying improbity action however neither predict ultimate outcome matter developments “car wash” investigation ongoing investigation related proceeding could adversely affect us time yet able determine likelihood loss arising matter restructuring agreement pursuant terms restructuring agreement among vdc majority secured creditors company agreed reorganization plan vdc agreed commence official liquidation proceedings laws cayman islands december 2 2015 pursuant restructuring agreement company acquired two subsidiaries responsible management company vdc exchange vdc note connection separation former parent company joint official liquidators appointed oversee liquidation vdc entered discussions regarding settlement certain intercompany receivables payables company subsidiaries one hand vdc subsidiaries commitments enter operating leases normal course business office space housing vehicles specified operating equipment leases contain renewal options would cause future cash payments change exercised renewal options see “note 5 leases” “notes consolidated financial statements” information pertaining future minimum lease obligations december 31 2019 purchase commitments 168 million purchase commitments consist obligations outstanding external vendors primarily related capital upgrades materials spare parts consumables related supplies drilling rigs 10 supplemental financial information prepaid expenses current assets prepaid expenses current assets consisted following property equipment net property equipment net consisted following assets consisted following current liabilities current liabilities consisted following 1 includes 24 million related cash awards granted certain key employees company pursuant underlying award agreements issued 2016 mip longterm liabilities longterm liabilities consisted following 1 stock compensation associated 2016 mip reclassified equity following conversion see “note 6 debt” “note 7 shareholders’ equity deficit” “notes consolidated financial statements” additional information regarding conversion resulting reclassification stock compensation 2 dividend equivalents vested tbgs payable settlement applicable award see “note 7 shareholders’ equity deficit” “notes consolidated financial statements” additional information regarding dividend equivalents cash equivalents restricted cash following table provides reconciliation cash equivalents restricted cash reported within consolidated balance sheet sum total amounts shown consolidated statement cash flows dates indicated restricted cash december 31 2019 represents cash held banks certificates deposit collateralizing letters credit transactions former parent company following table summarizes balances payable vdc included company’s consolidated balance sheet dates indicated see “note 9 commitments contingencies” “notes consolidated financial statements” additional information regarding balances payable vdc related party transactions association establishment advantage company ades contributed cash advantage excess issued capital joint venture understanding amounts considered shareholder loans december 31 2019 total outstanding amount due ades excess cash contributions approximately 694000 included “other current liabilities” consolidated balance sheet conjunction establishment advantage company entered series agreements ades including secondment agreement ii manpower agreement iii supply services agreement pursuant agreements company largely seconded employees provide various services ades turn provide various services advantage december 31 2019 accounts receivable ades totaled approximately 58 million accounts payable ades totaled approximately 71 million included “trade receivables” “accounts payable” respectively consolidated balance sheet see “note 1 organization recent events” “notes consolidated financial statements” additional details regarding joint venture mr thomas r bates jr chairman director company december 2019 elected chairman weatherford international provider equipment services company engaged transactions ordinary course business weatherford international totaling 04 million 2019 purchase equipment services december 31 2019 company payable weatherford 10778 transactions arm’slength basis mr bates involved transactions way except foregoing material related party transactions ordinary course business december 31 2019 11 business segment information aggregate contract drilling operations one reportable segment even though provide contract drilling services different types rigs including jackup rigs drillships different geographic regions operations dependent global oil gas industry rigs relocated based demand services customer requirements customers consist primarily large international oil gas companies national governmentcontrolled oil gas companies international exploration production companies soehanah jackup rig operated bareboat charter contract place acquisition additionally drilling units owned others provide construction supervision services construction preservation management services stacked operations marketing services operating rigs management business excluding reimbursable revenue represented less 1 total revenue years ended december 31 2019 2018 2017 respectively years ended december 31 2019 2018 2017 substantial amount revenue countries outside united states consequently exposed risk changes economic political social conditions inherent foreign operations contract termination revenue petrobras parties accounted approximately 78 consolidated revenue year ended december 31 2019 excluding contract termination revenue received petrobras parties four customers accounted approximately 23 13 11 consolidated revenue year ended december 31 2019 three customers accounted approximately 40 15 14 consolidated revenue year ended december 31 2018 four customers accounted approximately 51 15 13 11 consolidated revenue year ended december 31 2017 revenues country follows periods representing revenues less 10 included “other countries” 1 “other countries” represent countries revenues representing less 10 total revenues earned property equipment net country follows dates representing property equipment less 10 included “other countries” 1 “other countries” represent countries operate individually property equipment net representing less 10 total property equipment net substantial portion assets mobile drilling units asset locations end period necessarily indicative geographic distribution revenues generated assets periods 12 supplemental quarterly information unaudited following table reflects summary unaudited interim results operations years ended december 31 2019 2018 thousands except per share amounts 1 quarter ended december 31 2019 recorded 16 million 56 million “operating costs” “general administrative expense” respectively cash awards granted certain key employees company pursuant underlying award agreements issued amended 2016 mip also recorded 305 million “general administrative expense” related insurance costs judgment preservation insurance insure contingency required return petrobras payment earnings loss per share computed independently periods presented therefore sum periods’ earnings loss per share may agree total computed year item 9 item 15 exhibits financial statement schedules list documents filed part report 3 exhibits hereby file part annual report form 10k exhibits listed attached exhibit index signatures pursuant requirements section 13 15d securities exchange act 1934 amended registrant duly caused report signed behalf undersigned thereunto duly authorized vantage drilling international douglas g smith name douglas g smith title chief financial officer treasurer date march 30 2016 pursuant requirements securities exchange act 1934 amended report signed following persons capacities dates indicated name position date douglas g smith chief financial officer treasurer principal executive financial accounting officer march 30 2016 douglas g smith thomas r bates jr chairman director march 30 2016 thomas r bates jr nils e larsen director march 30 2016 nils e larsen l spencer wells director march 30 2016 l spencer wells esa ikaheimonen director march 30 2016 esa ikaheimonen scott mccarty director march 30 2016 scott mccarty matthew bonanno director march 30 2016 matthew bonanno exhibit indexitem 15 exhibits financial statement schedules list documents filed part report exhibit description 21 joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors dated december 1 2015 exhibit disclosure statement incorporated reference exhibit 99t3e1 form t3 filed offshore group investment limited sec december 2 2015 31 third amended restated memorandum articles incorporation company effective august 4 2016 incorporated reference exhibit 301 company’s current report form 8k filed sec august 5 2016 41 second amended restated credit agreement offshore group investment limited certain subsidiaries thereof guarantors lenders time party thereto lenders royal bank canada administrative agent collateral agent dated february 17 2016 incorporated reference exhibit 41 company’s current report form 8k filed sec february 17 2016 42 second lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 42 company’s current report form 8k filed sec february 17 2016 43 third lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 43 company’s current report form 8k filed sec february 17 2016 44 supplemental indenture dated june 8 2016 among vantage drilling international fka offshore group investment limited guarantors party thereto us bank national association trustee noteholder collateral agent third lien indenture dated february 10 2016 incorporated reference exhibit 44 company’s form s1 filed sec june 16 2016 101 shareholders agreement among offshore group investment limited shareholders defined therein dated february 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec february 17 2016 102 registration rights agreement among offshore group investment limited holders defined therein party thereto dated february 10 2016 incorporated reference exhibit 102 company’s current report form 8k filed sec february 17 2016 103 amendment 1 registration rights agreement dated may 9 2016 among vantage drilling international fka offshore group investment limited holders defined therein party thereto incorporated reference exhibit 103 form 10q filed sec may 13 2016 104 vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 104 amendment 3 form s1 filed sec november 3 2016 105 form restricted stock unit award agreement performancebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 105 amendment 3 form s1 filed sec november 3 2016 106 form restricted stock unit award agreement timebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 106 amendment 3 form s1 filed sec november 3 2016 107 offshore group investment limited 2016 management incentive plan offshore group investment limited executive officers certain employees dated february 10 2016 incorporated reference exhibit 103 company’s current report form 8k filed sec february 17 2016 108 form restricted stock unit award agreement performancebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 104 company’s current report form 8k filed sec february 17 2016 109 form restricted stock unit award agreement timebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 105 company’s current report form 8k filed sec february 17 2016 1010 form petrobras litigation award agreement incorporated reference exhibit 106 company’s current report form 8k filed sec february 17 2016 exhibit description 1011 form petrobras litigation letter incorporated reference exhibit 107 company’s current report form 8k filed sec february 17 2016 1012 third amended restated employment noncompetition agreement offshore group investment limited douglas w halkett dated february 10 2016 incorporated reference exhibit 1010 company’s current report form 8k filed sec february 17 2016 1013 third amended restated employment noncompetition agreement offshore group investment limited william l thomson dated february 10 2016 incorporated reference exhibit 1011 company’s current report form 8k filed sec february 17 2016 1014 employment agreement vantage drilling international douglas e stewart dated may 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec may 17 2016 1015 employment agreement vantage drilling international ihab toma dated august 9 2016 incorporated reference exhibit 1013 amendment 1 form s1 filed sec august 25 2016 1016 employment agreement vantage drilling international thomas j cimino dated september 22 2016 incorporated reference exhibit 1014 amendment 1 form s1 filed sec october 11 2016 1017 registration rights agreement among vantage drilling international vantage drilling company joint official liquidators vantage drilling company dated april 26 2017 incorporated reference exhibit 101 form 10ka filed sec may 1 2017 121 statement computation earnings fixed charges filed herewith 211 subsidiaries vantage drilling international filed herewith 311 certification principal executive officer pursuant section 302 filed herewith 312 certification principal financial accounting officer pursuant section 302 filed herewith 321 certification principal executive officer pursuant section 906 filed herewith 322 certification principal financial accounting officer pursuant section 906 filed herewith 101ins xbrl instance document filed herewith 101sch xbrl schema document filed herewith 101cal xbrl calculation document filed herewith 101def xbrl definition linkbase document filed herewith 101lab xbrl label linkbase document filed herewith 101pre xbrl presentation linkbase document filed herewith item 16 form 10k summary none signatures pursuant requirements section 13 15d securities exchange act 1934 amended registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 amended report signed following persons capacities dates indicated name position date ihab toma chief executive officer principal executive officer march 29 2018 ihab toma thomas j cimino chief financial officer principal financial accounting officer march 29 2018 thomas j cimino thomas r bates jr chairman director march 29 2018 thomas r bates jr nils e larsen director march 29 2018 nils e larsen l spencer wells director march 29 2018 l spencer wells esa ikaheimonen director march 29 2018 esa ikaheimonen scott mccarty director march 29 2018 scott mccarty matthew bonanno director march 29 2018 matthew bonannoitem 15 exhibits financial statement schedules list documents filed part report exhibit description 21 joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors dated december 1 2015 exhibit disclosure statement incorporated reference exhibit 99t3e1 form t3 filed offshore group investment limited sec december 2 2015 31 fourth amended restated memorandum articles incorporation company effective march 4 2018 incorporated reference exhibit 301 company’s current report form 8k filed sec march 8 2018 41 first lien indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated november 30 2018 incorporated reference exhibit 41 company’s current report form 8k filed sec december 4 2018 42 third lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 43 company’s current report form 8k filed sec february 17 2016 43 supplemental indenture dated june 8 2016 among vantage drilling international fka offshore group investment limited guarantors party thereto us bank national association trustee noteholder collateral agent third lien indenture dated february 10 2016 incorporated reference exhibit 44 company’s form s1 filed sec june 16 2016 101 shareholders agreement among offshore group investment limited shareholders defined therein dated february 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec february 17 2016 102 registration rights agreement among offshore group investment limited holders defined therein party thereto dated february 10 2016 incorporated reference exhibit 102 company’s current report form 8k filed sec february 17 2016 103 amendment 1 registration rights agreement dated may 9 2016 among vantage drilling international fka offshore group investment limited holders defined therein party thereto incorporated reference exhibit 103 form 10q filed sec may 13 2016 104 vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 104 amendment 3 form s1 filed sec november 3 2016 105 form restricted stock unit award agreement performancebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 105 amendment 3 form s1 filed sec november 3 2016 106 form restricted stock unit award agreement timebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 106 amendment 3 form s1 filed sec november 3 2016 107 offshore group investment limited 2016 management incentive plan offshore group investment limited executive officers certain employees dated february 10 2016 incorporated reference exhibit 103 company’s current report form 8k filed sec february 17 2016 108 form restricted stock unit award agreement performancebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 104 company’s current report form 8k filed sec february 17 2016 109 form restricted stock unit award agreement timebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 105 company’s current report form 8k filed sec february 17 2016 1010 form petrobras litigation award agreement incorporated reference exhibit 106 company’s current report form 8k filed sec february 17 2016 1011 form petrobras litigation letter incorporated reference exhibit 107 company’s current report form 8k filed sec february 17 2016 1012 third amended restated employment noncompetition agreement offshore group investment limited douglas w halkett dated february 10 2016 incorporated reference exhibit 1010 company’s current report form 8k filed sec february 17 2016 exhibit description 1013 third amended restated employment noncompetition agreement offshore group investment limited william l thomson dated february 10 2016 incorporated reference exhibit 1011 company’s current report form 8k filed sec february 17 2016 1014 employment agreement vantage drilling international douglas e stewart dated may 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec may 17 2016 1015 employment agreement vantage drilling international ihab toma dated august 9 2016 incorporated reference exhibit 1013 amendment 1 form s1 filed sec august 25 2016 1016 employment agreement vantage drilling international thomas j cimino dated september 22 2016 incorporated reference exhibit 1014 amendment 1 form s1 filed sec october 11 2016 1017 registration rights agreement among vantage drilling international vantage drilling company joint official liquidators vantage drilling company dated april 26 2017 incorporated reference exhibit 101 form 10ka filed sec may 1 2017 1018 amendment shareholders agreement vantage drilling international dated march 4 2019 incorporated reference exhibit 101 form 8k filed sec march 8 2019 121 statement computation earnings fixed charges filed herewith 211 subsidiaries vantage drilling international filed herewith 311 certification principal executive officer pursuant section 302 filed herewith 312 certification principal financial accounting officer pursuant section 302 filed herewith 321 certification principal executive officer pursuant section 906 filed herewith 322 certification principal financial accounting officer pursuant section 906 filed herewith 101ins xbrl instance document filed herewith 101sch xbrl schema document filed herewith 101cal xbrl calculation document filed herewith 101def xbrl definition linkbase document filed herewith 101lab xbrl label linkbase document filed herewith 101pre xbrl presentation linkbase document filed herewith item 16 form 10k summary none signatures pursuant requirements section 13 15d securities exchange act 1934 amended registrant duly caused report signed behalf undersigned thereunto duly authorized pursuant requirements securities exchange act 1934 amended report signed following persons capacities dates indicated name position date ihab toma chief executive officer principal executive officer march 14 2019 ihab toma thomas j cimino chief financial officer principal financial accounting officer march 14 2019 thomas j cimino thomas r bates jr chairman director march 14 2019 thomas r bates jr nils e larsen director march 14 2019 nils e larsen l spencer wells director march 14 2019 l spencer wells scott mccarty director march 14 2019 scott mccarty matthew bonanno director march 14 2019 matthew bonanno paul gordon director march 14 2019 paul gordon stephen lehner director march 14 2019 stephen lehneritem 15 exhibits financial statement schedules list documents filed part report exhibit description 21 joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors dated december 1 2015 exhibit disclosure statement incorporated reference exhibit 99t3e1 form t3 filed offshore group investment limited sec december 2 2015 31 fourth amended restated memorandum articles incorporation company effective march 4 2019 incorporated reference exhibit 31 company’s current report form 8k filed sec march 8 2019 41 first lien indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated november 30 2018 incorporated reference exhibit 41 company’s current report form 8k filed sec december 4 2018 42 third lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 43 company’s current report form 8k filed sec february 17 2016 43 supplemental indenture dated june 8 2016 among vantage drilling international fka offshore group investment limited guarantors party thereto us bank national association trustee noteholder collateral agent third lien indenture dated february 10 2016 incorporated reference exhibit 44 company’s form s1 filed sec june 16 2016 44 first supplemental indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated january 24 2019 incorporated reference exhibit 44 companys form 10k filed sec march 10 2020 45 second supplemental indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated february 13 2019 incorporated reference exhibit 45 companys form 10k filed sec march 10 2020 101 shareholders agreement among offshore group investment limited shareholders defined therein dated february 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec february 17 2016 102 registration rights agreement among offshore group investment limited holders defined therein party thereto dated february 10 2016 incorporated reference exhibit 102 company’s current report form 8k filed sec february 17 2016 103 amendment 1 registration rights agreement dated may 9 2016 among vantage drilling international fka offshore group investment limited holders defined therein party thereto incorporated reference exhibit 103 form 10q filed sec may 13 2016 104 vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 104 amendment 1 form s1 filed sec august 25 2016 105 form restricted stock unit award agreement performancebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 105 amendment 1 form s1 filed sec august 25 2016 106 form restricted stock unit award agreement timebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 106 amendment 1 form s1 filed sec august 25 2016 107 offshore group investment limited 2016 management incentive plan offshore group investment limited executive officers certain employees dated february 10 2016 incorporated reference exhibit 103 company’s current report form 8k filed sec february 17 2016 108 form restricted stock unit award agreement performancebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 104 company’s current report form 8k filed sec february 17 2016 109 form restricted stock unit award agreement timebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 105 company’s current report form 8k filed sec february 17 2016 1010 form petrobras litigation award agreement incorporated reference exhibit 106 company’s current report form 8k filed sec february 17 2016 exhibit description 1011 form petrobras litigation letter incorporated reference exhibit 107 company’s current report form 8k filed sec february 17 2016 1012 third amended restated employment noncompetition agreement offshore group investment limited douglas w halkett dated february 10 2016 incorporated reference exhibit 1010 company’s current report form 8k filed sec february 17 2016 1013 third amended restated employment noncompetition agreement offshore group investment limited william l thomson dated february 10 2016 incorporated reference exhibit 1011 company’s current report form 8k filed sec february 17 2016 1014 employment agreement vantage drilling international douglas e stewart dated may 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec may 17 2016 1015 employment agreement vantage drilling international ihab toma dated august 9 2016 incorporated reference exhibit 1013 amendment 1 form s1 filed sec august 25 2016 1016 employment agreement vantage drilling international thomas j cimino dated september 22 2016 incorporated reference exhibit 1014 amendment 2 form s1 filed sec october 11 2016 1017 registration rights agreement among vantage drilling international vantage drilling company joint official liquidators vantage drilling company dated april 26 2017 incorporated reference exhibit 101 form 10ka filed sec may 1 2017 1018 amendment shareholders agreement vantage drilling international dated march 4 2019 incorporated reference exhibit 101 form 8k filed sec march 8 2019 1019 agreement dated june 20 2019 among vantage deepwater company vantage deepwater drilling inc petroleo brasileiro sa petrobras america inc petrobras venezuela investments services bv incorporated reference exhibit 101 8k filed sec june 24 2019 211 subsidiaries vantage drilling international filed herewith 311 certification principal executive officer pursuant section 302 filed herewith 312 certification principal financial accounting officer pursuant section 302 filed herewith 321 certification principal executive officer pursuant section 906 filed herewith 322 certification principal financial accounting officer pursuant section 906 filed herewith 101ins xbrl instance document filed herewith 101sch xbrl schema document filed herewith 101cal xbrl calculation document filed herewith 101def xbrl definition linkbase document filed herewith 101lab xbrl label linkbase document filed herewith 101pre xbrl presentation linkbase document filed herewith item 16 form 10k summary none signatures pursuant requirements section 13 15d securities exchange act 1934 amended registrant duly caused report signed behalf undersigned thereunto duly authorized vantage drilling international douglas e stewart name douglas e stewart title chief financial officer general counsel corporate secretary date march 18 2021 pursuant requirements securities exchange act 1934 amended report signed following persons capacities dates indicated name position date ihab toma chief executive officer principal executive officer march 18 2021 ihab toma douglas e stewart chief financial officer general counsel corporate secretary principal financial accounting officer march 18 2021 douglas e stewart thomas r bates jr chairman director march 18 2021 thomas r bates jr nils e larsen director march 18 2021 nils e larsen l spencer wells director march 18 2021 l spencer wells paul gordon director march 18 2021 paul gordon richard b aubrey iii director march 18 2021 richard b aubrey iiiitem 15 exhibits financial statement schedules list documents filed part report exhibit description 21 joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors dated december 1 2015 exhibit disclosure statement incorporated reference exhibit 99t3e1 form t3 filed offshore group investment limited sec december 2 2015 31 third amended restated memorandum articles incorporation company effective august 4 2016 incorporated reference exhibit 301 company’s current report form 8k filed sec august 5 2016 41 second amended restated credit agreement offshore group investment limited certain subsidiaries thereof guarantors lenders time party thereto lenders royal bank canada administrative agent collateral agent dated february 17 2016 incorporated reference exhibit 41 company’s current report form 8k filed sec february 17 2016 42 second lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 42 company’s current report form 8k filed sec february 17 2016 43 third lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 43 company’s current report form 8k filed sec february 17 2016 44 supplemental indenture dated june 8 2016 among vantage drilling international fka offshore group investment limited guarantors party thereto us bank national association trustee noteholder collateral agent third lien indenture dated february 10 2016 incorporated reference exhibit 44 company’s form s1 filed sec june 16 2016 101 shareholders agreement among offshore group investment limited shareholders defined therein dated february 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec february 17 2016 102 registration rights agreement among offshore group investment limited holders defined therein party thereto dated february 10 2016 incorporated reference exhibit 102 company’s current report form 8k filed sec february 17 2016 103 amendment 1 registration rights agreement dated may 9 2016 among vantage drilling international fka offshore group investment limited holders defined therein party thereto incorporated reference exhibit 103 form 10q filed sec may 13 2016 104 vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 104 amendment 3 form s1 filed sec november 3 2016 105 form restricted stock unit award agreement performancebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 105 amendment 3 form s1 filed sec november 3 2016 106 form restricted stock unit award agreement timebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 106 amendment 3 form s1 filed sec november 3 2016 107 offshore group investment limited 2016 management incentive plan offshore group investment limited executive officers certain employees dated february 10 2016 incorporated reference exhibit 103 company’s current report form 8k filed sec february 17 2016 108 form restricted stock unit award agreement performancebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 104 company’s current report form 8k filed sec february 17 2016 109 form restricted stock unit award agreement timebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 105 company’s current report form 8k filed sec february 17 2016 1010 form petrobras litigation award agreement incorporated reference exhibit 106 company’s current report form 8k filed sec february 17 2016 exhibit description 1011 form petrobras litigation letter incorporated reference exhibit 107 company’s current report form 8k filed sec february 17 2016 1012 third amended restated employment noncompetition agreement offshore group investment limited douglas w halkett dated february 10 2016 incorporated reference exhibit 1010 company’s current report form 8k filed sec february 17 2016 1013 third amended restated employment noncompetition agreement offshore group investment limited william l thomson dated february 10 2016 incorporated reference exhibit 1011 company’s current report form 8k filed sec february 17 2016 1014 employment agreement vantage drilling international douglas e stewart dated may 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec may 17 2016 1015 employment agreement vantage drilling international ihab toma dated august 9 2016 incorporated reference exhibit 1013 amendment 1 form s1 filed sec august 25 2016 1016 employment agreement vantage drilling international thomas j cimino dated september 22 2016 incorporated reference exhibit 1014 amendment 1 form s1 filed sec october 11 2016 211 subsidiaries vantage drilling international filed herewith 311 certification principal executive officer pursuant section 302 filed herewith 312 certification principal financial accounting officer pursuant section 302 filed herewith 321 certification principal executive officer pursuant section 906 filed herewith 322 certification principal financial accounting officer pursuant section 906 filed herewith 101ins xbrl instance document filed herewith 101sch xbrl schema document filed herewith 101cal xbrl calculation document filed herewith 101def xbrl definition linkbase document filed herewith 101lab xbrl label linkbase document filed herewith 101pre xbrl presentation linkbase document filed herewith item 16 form 10k summary none signatures pursuant requirements section 13 15d securities exchange act 1934 amended registrant duly caused report signed behalf undersigned thereunto duly authorized vantage drilling international thomas j cimino name thomas j cimino title chief financial officer date march 9 2017 pursuant requirements securities exchange act 1934 amended report signed following persons capacities dates indicated name position date ihab toma chief executive officer principal executive officer march 9 2017 ihab toma thomas j cimino chief financial officer principal financial accounting officer march 9 2017 thomas j cimino thomas r bates jr chairman director march 9 2017 thomas r bates jr nils e larsen director march 9 2017 nils e larsen l spencer wells director march 9 2017 l spencer wells esa ikaheimonen director march 9 2017 esa ikaheimonen scott mccarty director march 9 2017 scott mccarty matthew bonanno director march 9 2017 matthew bonannoitem 15 exhibits financial statement schedules list documents filed part report exhibit description 21 joint prepackaged chapter 11 plan offshore group investment limited affiliated debtors dated december 1 2015 exhibit disclosure statement incorporated reference exhibit 99t3e1 form t3 filed offshore group investment limited sec december 2 2015 31 fourth amended restated memorandum articles incorporation company effective march 4 2019 incorporated reference exhibit 31 company’s current report form 8k filed sec march 8 2019 41 first lien indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated november 30 2018 incorporated reference exhibit 41 company’s current report form 8k filed sec december 4 2018 42 third lien indenture offshore group investment limited guarantors time party thereto including certain assignors defined therein us bank national association trustee noteholder collateral agent dated february 10 2016 incorporated reference exhibit 43 company’s current report form 8k filed sec february 17 2016 43 supplemental indenture dated june 8 2016 among vantage drilling international fka offshore group investment limited guarantors party thereto us bank national association trustee noteholder collateral agent third lien indenture dated february 10 2016 incorporated reference exhibit 44 company’s form s1 filed sec june 16 2016 44 first supplemental indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated january 24 2019 filed herewith 45 second supplemental indenture vantage drilling international subsidiary guarantors party thereto us bank national association trustee first lien collateral agent dated february 13 2019 filed herewith 101 shareholders agreement among offshore group investment limited shareholders defined therein dated february 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec february 17 2016 102 registration rights agreement among offshore group investment limited holders defined therein party thereto dated february 10 2016 incorporated reference exhibit 102 company’s current report form 8k filed sec february 17 2016 103 amendment 1 registration rights agreement dated may 9 2016 among vantage drilling international fka offshore group investment limited holders defined therein party thereto incorporated reference exhibit 103 form 10q filed sec may 13 2016 104 vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 104 amendment 1 form s1 filed sec august 25 2016 105 form restricted stock unit award agreement performancebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 105 amendment 1 form s1 filed sec august 25 2016 106 form restricted stock unit award agreement timebased vantage drilling international amended restated 2016 management incentive plan incorporated reference exhibit 106 amendment 1 form s1 filed sec august 25 2016 107 offshore group investment limited 2016 management incentive plan offshore group investment limited executive officers certain employees dated february 10 2016 incorporated reference exhibit 103 company’s current report form 8k filed sec february 17 2016 108 form restricted stock unit award agreement performancebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 104 company’s current report form 8k filed sec february 17 2016 109 form restricted stock unit award agreement timebased offshore group investment limited participant defined therein dated february 10 2016 incorporated reference exhibit 105 company’s current report form 8k filed sec february 17 2016 1010 form petrobras litigation award agreement incorporated reference exhibit 106 company’s current report form 8k filed sec february 17 2016 1011 form petrobras litigation letter incorporated reference exhibit 107 company’s current report form 8k filed sec february 17 2016 exhibit description 1012 third amended restated employment noncompetition agreement offshore group investment limited douglas w halkett dated february 10 2016 incorporated reference exhibit 1010 company’s current report form 8k filed sec february 17 2016 1013 third amended restated employment noncompetition agreement offshore group investment limited william l thomson dated february 10 2016 incorporated reference exhibit 1011 company’s current report form 8k filed sec february 17 2016 1014 employment agreement vantage drilling international douglas e stewart dated may 10 2016 incorporated reference exhibit 101 company’s current report form 8k filed sec may 17 2016 1015 employment agreement vantage drilling international ihab toma dated august 9 2016 incorporated reference exhibit 1013 amendment 1 form s1 filed sec august 25 2016 1016 employment agreement vantage drilling international thomas j cimino dated september 22 2016 incorporated reference exhibit 1014 amendment 2 form s1 filed sec october 11 2016 1017 registration rights agreement among vantage drilling international vantage drilling company joint official liquidators vantage drilling company dated april 26 2017 incorporated reference exhibit 101 form 10ka filed sec may 1 2017 1018 amendment shareholders agreement vantage drilling international dated march 4 2019 incorporated reference exhibit 101 form 8k filed sec march 8 2019 1019 agreement dated june 20 2019 among vantage deepwater company vantage deepwater drilling inc petroleo brasileiro sa petrobras america inc petrobras venezuela investments services bv incorporated reference exhibit 101 8k filed sec june 24 2019 211 subsidiaries vantage drilling international filed herewith 311 certification principal executive officer pursuant section 302 filed herewith 312 certification principal financial accounting officer pursuant section 302 filed herewith 321 certification principal executive officer pursuant section 906 filed herewith 322 certification principal financial accounting officer pursuant section 906 filed herewith 101ins xbrl instance document filed herewith 101sch xbrl schema document filed herewith 101cal xbrl calculation document filed herewith 101def xbrl definition linkbase document filed herewith 101lab xbrl label linkbase document filed herewith 101pre xbrl presentation linkbase document filed herewith item 16 form 10k summary none signatures pursuant requirements section 13 15d securities exchange act 1934 amended registrant duly caused report signed behalf undersigned thereunto duly authorized vantage drilling international thomas j cimino name thomas j cimino title chief financial officer date march 9 2020 pursuant requirements securities exchange act 1934 amended report signed following persons capacities dates indicated name position date ihab toma chief executive officer principal executive officer march 9 2020 ihab toma thomas j cimino chief financial officer principal financial accounting officer march 9 2020 thomas j cimino thomas r bates jr chairman director march 9 2020 thomas r bates jr nils e larsen director march 9 2020 nils e larsen l spencer wells director march 9 2020 l spencer wells scott mccarty director march 9 2020 scott mccarty matthew bonanno director march 9 2020 matthew bonanno paul gordon director march 9 2020 paul gordon richard b aubrey iii director march 9 2020 richard b aubrey iii