By Isac Simon, The Motley Fool

With new high-value prospects of oil being found regularly off coastal areas and under seabeds, drilling companies are out to make a killing. Houston-based Vantage Drilling (VTG) is one such company which has jacked up its drills.

A relatively new company, Vantage is an offshore drilling contractor specializing in deepwater drilling and other high-end drilling solutions. It has a new fleet of mobile drillers and drillships with drilling-depth capacities ranging from 30,000 to 40,000 feet. With assets worth over $1.7 billion having an average age of less than two years, Vantage looks like it should be a major player in the drilling sector for years to come.

The Finances
The revenues look impressive, with year-over-year growth of 149%. However, with only three years of operations under its belt, it's too early to comment on this trend; it will take a few years to really see what's going on. Gross profit for 2010 of $102 million rose by 36% from the previous year. However, the company reported a net loss of $47.6 million thanks to a net interest expense of $49.3 million, which is not entirely usual for a new energy company.

The year-over-year long-term debt rose to $1.1 billion, from $378 million. However, this should not be taken as a negative development as it is common for new companies in the oil industry to have substantial debt. In fact, the positive thing is that the company has the ability to service its debt. One thing to watch in the short term is EBITDA/interest expense, which stands at 1.6 times, down from 3.6 times in 2009. While this is not bad in itself, the company needs to work harder to generate higher revenues to finance the loans. I expect that to occur once operations really take flight.

Generating higher revenues in the long run does not seem to be a big problem. Established players like Diamond Offshore Drilling (DO) and Atwood Oceanics (ATW) have proved that.

What's in store?
With emerging markets like India requiring the services of offshore drilling contractors, the demand for such is on the rise. Last December, Vantage commenced operations for Oil and Natural Gas Corp. in a contract that is expected to fetch approximately $1.1 billion in revenues over the next five years. It also bagged a contract with Petronas worth $77.9 million in the same month.

This stock is definitely not for a short-term hold, and I'm confident that Vantage is on its way to become an established player in the sector. Think otherwise? Let us know in the comments section below.

Isac Simon does not own shares of any of the companies mentioned in this article. Atwood Oceanics is a Motley Fool Stock Advisor pick. The Fool owns shares of Diamond Offshore Drilling. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.



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Dereck

Major Fraud Alert


The entire Federal Banking System under FirstGov has been "Consumed" and "Levied" by way of a Maryland State Circuit/District Court Ruled “Appropriation and Garnishment” of all Future Earnings prior to and after 2004 against Bank Of America by way of the F.D.I.C. Regulations Prohibiting failing Banks from Merging with other failing Banks between the Dates of 08/04/08 and 10/09/09.

Bank of America violated the 21st Century Act: Final Amendments to Regulation CC Section: http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040726/attachment.pdf

seeking reimbursement of Credit, Loan, and Finance Balances as a "Bank Entity" and not a "Nonbank Consumer" as specified on Pages 85 and 86.

The person they sued through a LLC. Debt Collection Company and Law Firm was the "World Fortune Owner" who "Counterclaimed" and won.

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Businesses owned by the States (Public Corporations) are being sold Stock Shares by Corporations also under the Federal Banking System in this Worldwide "Ponzi Scheme". The World Fortune Company Merrick Inc. Sweden is dissolving Millions and Billions of Dollars from "All Levels of Government"in the U.S. of Financing based upon Years of "negligent inaction" involving this case.

The Federal Government has already been forced to discontinue supplying the Financing States use to pay their debts, Persons in Government Offices may want to begin to take their jobs more seriously, these are different times from 10 Years ago and you will not be accepted civil servants here just because you say you are here to do the right thing.

May 29 2011 at 12:21 AM Report abuse rate up rate down Reply
danielisticall

George H W Bush placed a offshore drilling ban in 1990,,then George W bush lifted it July 2008 ,, 19 months later B P has the biggest oil spill/explosion in the history of the country,killing 11 people________________________George W. Bush in July 2008 lifted a 1990 executive order by George H. W. Bush banning offshore drilling, while at the same time calling for drilling in the Arctic National Wildlife Refuge. In less than two years time B P manadged to have the worst oil spill in the history of this country killing 11 people,, President Barack Obama is for limited offshore drilling as part of an extensive energy independence overhaul,,,On March 31, 2010, President Obama announced that he was opening new areas in U.S. coastal waters to offshore drilling for gas and oil
_____________ Offshore drilling has continued________ uninterrupted_______ in offshore Texas and Louisiana. ______In 2006, an 8,300,000-acre (33,600 km2) area in the Gulf of Mexico known as lease 181 was opened for exploration. The existing moratorium on leasing on the Outer Continental Shelf expires in 2012, and the debate is on whether or not to extend it_________________________DRILLING FOR OIL IN THIS COUNTRY HAS NEVER STOPED AT ANY TIME IN HISTORY,,,,,TURN OFF FIX NEWS

April 01 2011 at 9:41 PM Report abuse rate up rate down Reply
danielisticall

THANKS TO TORT REFORME B P IS IN NO DANGER OF BANKRUPCY---

WASHINGTON -A federal law may limit how much BP has to pay for damages such as lost wages and economic suffering in the Gulf Coast oil spill, despite President Barrack Obama's assurances that taxpayers will not be on the hook.
A law passed in response to the 1989 under papa bush, the Exxon Valdez spill in Alaska makes BP responsible for cleanup costs. But the law sets a $75 million limit on other kinds of damages. ,,,,here is the TORT REFORME THE GOP WANTS SO BADLY AND WHAT IT DOES,,,,,,,,,,,,,
Economic losses to the Gulf Coast are likely to exceed that. In response, several Democratic senators introduced legislation to raise the liability limit to $10 billion, though it was not clear that it could be made to apply retroactively.

April 01 2011 at 9:39 PM Report abuse rate up rate down Reply
danielisticall

___HERE IT IS GET AN EDUCATION AND TURN OFF FIX NEWS
POOR MISSINFORMED FAUX FOX FOOLS ___OBAMA GAVE__NOTHING__ TO BRAZIL AND HAD NOTHING TO DO WITH IT
This claim stems from a "preliminary commitment" made back on April 14 by the board of directors of the Export-Import Bank of the United States__. The bank intends to loan up to $2 billion to finance exports to the Brazilian oil company Petróleo Brasileiro S.A., known as Petrobras,__ over the next several years.
The e-mail is false on two counts.____
The message falsely says the decision was due to an "executive order" by the president. No presidential order was required. Furthermore, none of President Obama’s appointees had joined the Ex-Im board at the time of the vote, which was unanimous, and bipartisan. The Ex-Im Bank states: "In fact, at the time the Bank’s Board consisted of three Republicans and two Democrats, all of whom were appointed by George W. Bush."_____
The message falsely claims that "we have absolutely no gain" from the loan. In fact, the loan is being made specifically to finance purchase by Petrobras of U.S.-made oilfield equipment and services. The mission of the Ex-Im Bank is to encourage exports by making such loans.
NOTICE GEORGE SORROS IS NOT EVEN MENTIONED YOU FALSE INFORMATION FOOL
The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers.____________WANNA TELL ME ABOUT CHINA DRILING OFF CUBA???

April 01 2011 at 9:28 PM Report abuse rate up rate down Reply
yourcountry2

Obama said American boots would never touch the ground in Libya. What are the CIA opps wearing............NIKES?

April 01 2011 at 1:59 PM Report abuse +1 rate up rate down Reply
3 replies to yourcountry2's comment
inasctg56

As soon as you start talking policy and legislation everybody leaves.

March 31 2011 at 11:10 PM Report abuse rate up rate down Reply
1 reply to inasctg56's comment
yourcountry2

When it's nutty liberalism everyone gets bored and leaves.

April 01 2011 at 1:58 PM Report abuse +1 rate up rate down Reply
inasctg56

Gop - cut upper 2% taxes and then cut tsunami warnings, cut the IRS so they can't go after their offshore accounts which we end up losing money on, cut aviation, energy, jobs and wages. Wow - a winning agenda and people fall for it.

March 31 2011 at 11:10 PM Report abuse +2 rate up rate down Reply
1 reply to inasctg56's comment
yourcountry2

Well some idiots fell for Obamas nonsense.

April 01 2011 at 1:59 PM Report abuse rate up rate down Reply
inasctg56

844,000 jobs added in the last four months and if Boehner's cuts go thru it will cost us 700,000. Nothing like underminding the president's economic recovery for political gain.

March 31 2011 at 11:07 PM Report abuse +2 rate up rate down Reply
2 replies to inasctg56's comment
yourcountry2

Stop making up statistics.

April 01 2011 at 2:00 PM Report abuse rate up rate down Reply
inasctg56

I guess when you pay no federal taxes and get subsidies from the govt, and sell to the highest bidder you should have a good forecast.

March 31 2011 at 11:03 PM Report abuse +2 rate up rate down Reply
mgazaway

I only revewed this briefly.... my reaction is that IMHO you are vastly poo-pooing the debt load. So many factors that can cause problems for drillers (I even try to list them, I wont patronize). That cash and run-out in a hurry and debt fall into default (and what does that do to worth of the LTA's that were going to pay the debt?).

No doubt you are more knowledgeable than I on this, or any other oil producer,

But...being a Bank Exec for 20+ years (MELLON et al) you must not try to dress up the pig in ANY circumstance....it's there, and its a serious concern. So, eyes wide open please.

MG

March 31 2011 at 5:12 PM Report abuse rate up rate down Reply