Parker Wellbore Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

6 Months Ended

Jun. 30, 2011

Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements [Abstract]

Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

11. Parent, Guarantor, Non-Guarantor Unaudited Consolidating Condensed Financial Statements

Set forth on the following pages are the consolidating condensed financial statements of Parker Drilling. The Company’s 9.125% Notes are guaranteed by substantially all of the restricted subsidiaries of Parker Drilling. There are currently no restrictions on the ability of the restricted subsidiaries to transfer funds to Parker Drilling in the form of cash dividends, loans or advances. Parker Drilling is a holding company with no operations, other than through its subsidiaries. Separate financial statements for each guarantor company are not provided as the company complies with the exception to Rule 3-10(a)(1) of Regulation S-X, set forth in sub-paragraph (f) of such rule. All guarantor subsidiaries are owned 100 percent by the parent company, all guarantees are full and unconditional and all guarantees are joint and several.

We are providing consolidating condensed financial information of the parent, Parker Drilling, the guarantor subsidiaries, and the non-guarantor subsidiaries as of June 30, 2011 and December 31, 2010 and for the three and six months ended June 30, 2011 and 2010. The consolidating condensed financial statements present investments in both consolidated and unconsolidated subsidiaries using the equity method of accounting.

PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATING CONDENSED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)


	June 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	30,839		$	7,921		$	28,735		$	—		$	67,495
Accounts and notes receivable, net		(256,872	)		98,051			274,764			67,266			183,209
Rig materials and supplies		—			(1,606	)		26,822			—			25,216
Deferred costs		—			—			4,525			—			4,525
Deferred income taxes		(35	)		4,666			2,650			(18	)		7,263
Other tax assets		42,665			(9,311	)		8,792			—			42,146
Assets held for sale		—			—			5,287			—			5,287
Other current assets		789			7,550			9,824			(4,463	)		13,700


Total current assets		(182,614	)		107,271			361,399			62,785			348,841


Property, plant and equipment, net		79			595,561			260,182			—			855,822

Investment in subsidiaries and intercompany advances		1,370,963			(250,540	)		1,337,387			(2,457,810	)		—

Other noncurrent assets		46,050			11,724			21,874			(75	)		79,573


Total assets	$	1,234,478		$	464,016		$	1,980,841		$	(2,395,100	)	$	1,284,236

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	24,000		$	—		$	—		$	—		$	24,000
Accounts payable and accrued liabilities		57,897			78,706			192,744			(197,556	)		131,791
Accrued income taxes		23			(31	)		3,919			—			3,911


Total current liabilities		81,920			78,675			196,663			(197,556	)		159,702


Long-term debt		467,730			—			—			—			467,730
Other long-term liabilities		7,999			7,711			16,103			—			31,813
Long-term deferred tax liability		3,295			21,638			(10,330	)		(206	)		14,397
Intercompany payables		62,583			43,657			111,659			(217,899	)		—
Contingencies		—			—			—			—			—

Stockholders’ equity:
Common stock		19,446			18,049			43,003			(61,052	)		19,446
Capital in excess of par value		633,997			733,122			1,436,369			(2,169,491	)		633,997
Retained earnings (accumulated deficit)		(42,492	)		(438,836	)		187,731			251,105			(42,492	)


Total controlling interest stockholders’ equity		610,951			312,335			1,667,103			(1,979,438	)		610,951

Noncontrolling interest		—			—			(357	)		—			(357	)

Total Equity		610,951			312,335			1,666,746			(1,979,438	)		610,594


Total liabilities and stockholders’ equity	$	1,234,478		$	464,016		$	1,980,841		$	(2,395,099	)	$	1,284,236

CONSOLIDATING CONDENSED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)


	December 31, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	13,835		$	2,317		$	35,279		$	—		$	51,431
Accounts and notes receivable, net		1,179			99,734			215,650			(147,687	)		168,876
Rig materials and supplies		—			(1,655	)		27,182			—			25,527
Deferred costs		—			—			2,229			—			2,229
Deferred income taxes		8,981			297			—			—			9,278
Other tax assets		97,896			(62,678	)		11,211			—			46,429
Assets held for sale		—			—			5,287			—			5,287
Other current assets		557			41,564			30,129			(13,183	)		59,067


Total current assets		122,448			79,579			326,967			(160,870	)		368,124


Property, plant and equipment, net		79			538,005			278,063			—			816,147

Investment in subsidiaries and intercompany advances		996,018			499,987			1,310,792			(2,806,797	)		—

Other noncurrent assets		72,202			14,542			6,653			(3,113	)		90,284


Total assets	$	1,190,747		$	1,132,113		$	1,922,475		$	(2,970,780	)	$	1,274,555


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	12,000		$	—		$	—		$	—		$	12,000
Accounts payable and accrued liabilities		55,257			338,626			160,316			(395,428	)		158,771
Accrued income taxes		609			93			3,790			—			4,492


Total current liabilities		67,866			338,719			164,106			(395,428	)		175,263


Long-term debt		460,862			—			—			—			460,862
Other long-term liabilities		7,762			7,610			12,131			2,690			30,193
Long-term deferred tax liability		3,361			21,958			(5,148	)		—			20,171
Intercompany payables		62,583			473,144			103,667			(639,394	)		—
Contingencies		—			—			—			—			—

Stockholders’ equity:
Common stock		19,397			18,050			43,003			(61,053	)		19,397
Capital in excess of par value		630,409			733,120			1,436,338			(2,169,458	)		630,409
Retained earnings (accumulated deficit)		(61,493	)		(460,488	)		168,625			291,863			(61,493	)


Total controlling interest stockholders’ equity		588,313			290,682			1,647,966			(1,938,648	)		588,313

Noncontrolling interest		—			—			(247	)		—			(247	)

Total Equity		588,313			290,682			1,647,719			(1,938,648	)		588,066


Total liabilities and stockholders’ equity	$	1,190,747		$	1,132,113		$	1,922,475		$	(2,970,780	)	$	1,274,555

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)


	Three months ended June 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	95,435		$	100,323		$	(22,946	)	$	172,812
Operating expenses	$	—		$	41,078		$	86,405		$	(22,946	)		104,537
Depreciation and amortization	$	—		$	15,387		$	11,945		$	—			27,332

Total operating gross margin		—			38,970			1,973			—			40,943

General and administration expense ⁽¹⁾	$	(83	)	$	(7,944	)	$	(67	)	$	—			(8,094	)
Provision for reduction in carrying value of certain assets	$	—		$	—		$	—		$	—			—
Gain on disposition of assets, net	$	—		$	94		$	272		$	—			366

Total operating income (loss)		(83	)		31,120			2,178			—			33,215

Other income and (expense):
Interest expense	$	(6,746	)	$	(8,909	)	$	(2,159	)	$	12,059			(5,755	)
Interest income	$	8,971		$	190		$	3,031		$	(12,059	)		133
Gain (Loss) on fair value of derivative contracts	$	(137	)	$	—		$	—		$	—			(137	)
Other	$	—		$	120		$	3		$	—			123
Equity in net earnings of subsidiaries	$	36,794		$	—		$	—		$	(36,794	)		—

Total other income and (expense)		38,882			(8,599	)		875			(36,794	)		(5,636	)

Income (benefit) before income taxes		38,799			22,521			3,053			(36,794	)		27,579

Income tax expense (benefit):
Current	$	(7,817	)	$	9,546		$	5,361		$	—			7,090
Deferred	$	32,442		$	(1,866	)	$	(24,202	)	$	—			6,374

Total income tax expense (benefit)		24,625			7,680			(18,841	)		—			13,464

Net income (loss)	$	14,174		$	14,841		$	21,894		$	(36,794	)	$	14,115

Less: Net (loss) attributable to noncontrolling interest		—			—			(58	)		—			(58	)

Net (loss) attributable to controlling interest	$	14,174		$	14,841		$	21,952		$	(36,794	)	$	14,173


(1)		All field operations general and administration expenses are included in operating expenses.

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)


	Three months ended June 30, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated

Total revenues	$	—		$	88,029		$	92,906		$	(24,410	)	$	156,525
Operating expenses		—			57,504			75,881			(24,410	)		108,975
Depreciation and amortization		—			15,912			13,100			—			29,012

Total operating gross margin		—			14,613			3,925			—			18,538

General and administration expense ⁽¹⁾		(86	)		(6,778	)		(73	)		—			(6,937	)
Gain on disposition of assets, net		—			1,009			703			—			1,712

Total operating income (loss)		(86	)		8,844			4,555			—			13,313

Other income and (expense):
Interest expense		(8,475	)		(8,909	)		(3,642	)		13,640			(7,386	)
Interest income		10,523			167			13,029			(23,641	)		78
Loss on extinguishment of debt		(3,989	)		—			—			—			(3,989	)
Other		1			91			23			—			115
Equity in net earnings of subsidiaries		432			—			—			(432	)		—

Total other income and (expense)		(1,508	)		(8,651	)		9,410			(10,433	)		(11,182	)

Income (benefit) before income taxes		(1,594	)		193			13,965			(10,433	)		2,131

Income tax expense (benefit):
Current		193			(375	)		5,174			—			4,992
Deferred		(2,294	)		(14	)		(1,060	)		—			(3,368	)

Total income tax expense (benefit)		(2,101	)		(389	)		4,114			—			1,624

Net income (loss)		507			582			9,851			(10,433	)		507


Less: Net income attributable to noncontrolling interest		—			—			—			—			—

Net income (loss) attributable to controlling interest	$	507		$	582		$	9,851		$	(10,433	)	$	507


(1)		All field operations general and administration expenses are included in operating expenses.

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)


	Six months ended June 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	182,840		$	208,414		$	(62,263	)	$	328,991
Operating expenses		—			91,398			182,694			(62,263	)		211,829
Depreciation and amortization		—			30,597			24,334			—			54,931

Total operating gross margin		—			60,845			1,386			—			62,231

General and administration expense ⁽¹⁾		(128	)		(14,725	)		(129	)		—			(14,982	)
Gain on disposition of assets, net		—			904			466			—			1,370

Total operating income (loss)		(128	)		47,024			1,723			—			48,619

Other income and (expense):
Interest expense		(13,598	)		(17,819	)		(3,887	)		23,688			(11,616	)
Interest income		17,941			380			5,546			(23,688	)		179
Gain (Loss) on fair value of derivative contracts		(137	)		—			—			—			(137	)
Other		—			120			14			—			134
Equity in net earnings of subsidiaries		40,759			—			—			(40,759	)		—

Total other income and (expense)		44,965			(17,319	)		1,673			(40,759	)		(11,440	)

Income (benefit) before income taxes		44,837			29,705			3,396			(40,759	)		37,179

Income tax expense (benefit):
Current		(7,882	)		9,768			9,223			—			11,109
Deferred		33,718			(1,715	)		(24,809	)		—			7,194

Total income tax expense (benefit)		25,836			8,053			(15,586	)		—			18,303

Net income (loss)		19,001			21,652			18,982			(40,759	)		18,876

Less: Net (loss) attributable to noncontrolling interest		—			—			(125	)		—			(125	)

Net (loss) attributable to controlling interest	$	19,001		$	21,652		$	19,107		$	(40,759	)	$	19,001


(1)		All field operations general and administration expenses are included in operating expenses.

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)


	Six months ended June 30, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	166,385		$	196,884		$	(49,139	)	$	314,130
Operating expenses		—			111,627			160,018			(49,139	)		222,506
Depreciation and amortization		—			31,763			25,837			—			57,600

Total operating gross margin		—			22,995			11,029			—			34,024

General and administration expense ⁽¹⁾		(131	)		(16,666	)		(172	)		—			(16,969	)
Gain on disposition of assets, net		—			1,578			806			—			2,384

Total operating income (loss)		(131	)		7,907			11,663			—			19,439

Other income and (expense):
Interest expense		(16,264	)		(17,819	)		(8,251	)		28,216			(14,118	)
Interest income		21,015			398			16,956			(38,217	)		152
Loss on extinguishment of debt		(7,209	)		—			—			—			(7,209	)
Other		1			68			188			—			257
Equity in net earnings of subsidiaries		(5,962	)		—			—			5,962			—

Total other income and (expense)		(8,419	)		(17,353	)		8,893			(4,039	)		(20,918	)

Income (benefit) before income taxes		(8,550	)		(9,446	)		20,556			(4,039	)		(1,479	)

Income tax expense (benefit):
Current		438			(256	)		8,458			—			8,640
Deferred		(7,444	)		(24	)		(1,107	)		—			(8,575	)

Total income tax expense (benefit)		(7,006	)		(280	)		7,351			—			65

Net income (loss)		(1,544	)		(9,166	)		13,205			(4,039	)		(1,544	)


Less: Net income attributable to noncontrolling interest		—			—			—			—			—

Net income (loss) attributable to controlling interest	$	(1,544	)	$	(9,166	)	$	13,205		$	(4,039	)	$	(1,544	)


(1)		All field operations general and administration expenses are included in operating expenses.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)


	Six Months Ended June 30, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	19,001		$	21,652		$	18,982		$	(40,759	)	$	18,876
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			30,597			24,334			—			54,931
Gain on disposition of assets		—			(904	)		(466	)		—			(1,370	)
Deferred income tax expense		33,718			(1,715	)		(24,809	)		—			7,194
Expenses not requiring cash		8,661			—			(306	)		—			8,355
Equity in net earnings of subsidiaries		(40,759	)		—			—			40,759			—
Change in accounts receivable		258,051			(211,818	)		(58,296	)		—			(12,677	)
Change in other assets		67,376			(21,355	)		2,917			—			48,938
Change in liabilities		(11,797	)		(73,099	)		55,934			—			(28,962	)

Net cash provided by (used in) operating activities		334,251			(256,642	)		18,290			—			95,899


Cash flows from investing activities:
Capital expenditures		—			(92,606	)		(6,771	)		—			(99,377	)
Proceeds from the sale of assets		—			1,590			763			—			2,353
Proceeds from insurance settlements		—			250			—			—			250

Net cash provided by (used in) investing activities		—			(90,766	)		(6,008	)		—			(96,774	)


Cash flows from financing activities:
Proceeds from issuance of debt		50,000			—			—			—			50,000
Repayments of term loan		(9,000	)		—			—			—			(9,000	)
Repayments of revolver		(25,000	)		—			—			—			(25,000	)
Payment of debt issuance costs		(504	)		—			—			—			(504	)
Proceeds from stock options exercised		183			—			—			—			183
Excess tax benefit from stock-based compensatio		1,260			—			—			—			1,260
Intercompany advances, net		(334,186	)		353,012			(18,826	)		—			—

Net cash provided by (used in) financing activities		(317,247	)		353,012			(18,826	)		—			16,939


Net change in cash and cash equivalents		17,004			5,604			(6,544	)		—			16,064
Cash and cash equivalents at beginning of period		13,835			2,317			35,279			—			51,431

Cash and cash equivalents at end of period	$	30,839		$	7,921		$	28,735		$	—		$	67,495

See accompanying notes to unaudited consolidated condensed financial statements.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)


	Six Months Ended June 30, 2010
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(1,544	)	$	(9,166	)	$	13,205		$	(4,039	)	$	(1,544	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			31,763			25,837			—			57,600
Loss on extinguishment of debt		7,209			—			—			—			7,209
Gain on disposition of assets		—			(1,578	)		(806	)		—			(2,384	)
Deferred income tax expense		(7,444	)		(24	)		(1,107	)		—			(8,575	)
Expenses not requiring cash		6,392			—			—			—			6,392
Equity in net earnings of subsidiaries		5,962			—			—			(5,962	)		—
Change in accounts receivable		(6,619	)		9,189			22,338			—			24,908
Change in other assets		(7,974	)		8,646			(12,079	)		—			(11,407	)
Change in liabilities		8,385			(22,953	)		(3,438	)		—			(18,006	)

Net cash provided by (used in) operating activities		4,367			15,877			43,950			(10,001	)		54,193


Cash flows from investing activities:
Capital expenditures		—			(104,234	)		(24,739	)		—			(128,973	)
Proceeds from the sale of assets		—			2,098			700			—			2,798
Intercompany dividend payment		—						(10,001	)		10,001			—

Net cash provided by (used in) investing activities		—			(102,136	)		(34,040	)		10,001			(126,175	)


Cash flows from financing activities:
Proceeds from issuance of debt		300,000			—			—			—			300,000
Repayment of term loan		(6,000	)		—			—			—			(6,000	)
Repayment of revolver		(42,000	)		—			—			—			(42,000	)
Paydown on Senior notes		(225,000	)		—			—			—			(225,000	)
Payment of debt issuance costs		(7,896	)		—			—			—			(7,896	)
Payment of debt extinguishment costs		(7,466	)		—			—			—			(7,466	)
Proceeds from stock options exercised		26			—			—			—			26
Excess tax benefit from stock-based compensation		1,285			—			—			—			1,285
Intercompany advances, net		(63,099	)		87,302			(24,203	)		—			—

Net cash provided by (used in) financing activities		(50,150	)		87,302			(24,203	)		—			12,949


Net change in cash and cash equivalents		(45,783	)		1,043			(14,293	)		—			(59,033	)
Cash and cash equivalents at beginning of period		58,189			1,768			48,846			—			108,803

Cash and cash equivalents at end of period	$	12,406		$	2,811		$	34,533		$	—		$	49,770

See accompanying notes to unaudited consolidated condensed financial statements.