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While many investors are familiar with some of the world's largest offshore drilling companies, such as Transocean (NYSE:RIG) and Noble Corp (NYSE:NE), there is a smaller but fast growing company that is worth considering. Vantage Drilling Company, Inc. (NYSEMKT:VTG) is a relatively young company and as such it has some very modern equipment which allows it to charge premium rates. (Many offshore drillers have a fleet with an average age that exceeds 20 years.) Newer equipment is generally more efficient and less prone to mechanical or safety failures. Vantage has a fleet that includes jackup rigs and drillships.

Vantage also has an experienced management team that includes executives from top companies in this industry. For example, Paul A. Bragg is CEO, and he was formerly CEO at Pride International. Douglas Halkett was a division manager and operations manager at Transocean and now holds the COO title at Vantage.

Vantage recently reported solid financial results. For the third quarter of 2012, it announced net income of $2 million or 1 cent per diluted share, (excluding about $2.5 million in charges for the early retirement of debt). This compares favorably with a net loss of $11.9 million or 4 cents per diluted share for the same period last year. Over time this company has been making progress with the effort to reduce losses and grow revenues. For example, in the first nine months ended September 30, 2012, Vantage reported a net loss of $9.2 million or 3 cents per diluted shares, which is a big improvement when compared to a net loss of $45.4 million or 16 cents per diluted share. As revenues continue to grow, the financial results should keep improving.

One ongoing challenge for this company is the debt load. Vantage has about $2.08 billion in debt and around $124 million in cash. That is a heavy debt load and the interest payments are a significant expense. A higher debt load can increase risks for shareholders and this should be considered before buying the stock. However, the company has been successfully managing the debt and if revenues continue to grow, the debt will be less of an issue.

Thanks to new contracts, rising contract rates and additional equipment, analysts expect revenues to grow substantially in 2013. Analysts were projecting about $506 million in revenues for this year, but see revenues jumping to about $694 million in 2013. That's a gain of roughly 40%. The company is expected to post a profit of 12 cents per share in 2013, which could signal a real turning point for Vantage. While the debt load is a risk factor to consider, the strong management team and improving financial results make this stock an interesting speculation, especially on pullbacks.

Here are some key points for VTG:
Current share price: $1.71
The 52 week range is $1.01 to $1.95
Earnings estimates for 2012: a loss of 12 cents per share
Earnings estimates for 2013: 12 cents per share
Annual dividend: none

Data is sourced from Yahoo Finance. No guarantees or representations
are made. Hawkinvest is not a registered investment advisor and does
not provide specific investment advice. The information is for
informational purposes only. You should always consult a financial
advisor.

Source: Vantage: Analysts Expect Major Growth In 2013 For This $1 Oil Drilling Stock