HOUSTON, Aug. 2, 2012 /PRNewswire/ -- Parker Drilling Company (NYSE-PKD), a drilling contractor, drilling services and rental tools provider, today reported results for the quarter and year-to-date periods ended June 30, 2012.  The Company's results for the 2012 second quarter included net income of $20.1 million or $0.17 per diluted share on revenues of $178.9 million compared with net income of $14.2 million or $0.12 per diluted share on revenues of $172.8 million for the 2011 second quarter.  Excluding the effects of non-routine items, the Company reported net income of $21.3 million or $0.18 per diluted share compared with similarly adjusted 2011 second quarter net income of $15.8 million or $0.13 per diluted share.  Adjusted EBITDA, excluding non-routine items, was $67.2 million compared with $62.7 million for the prior year's second quarter.

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"Parker's operating results for the 2012 second quarter included year-to-year increases in revenues, adjusted EBITDA, net income and earnings per share," said Parker Drilling Company Chairman, President and Chief Executive Officer, Robert L. Parker Jr. "We achieved revenue growth in our Rental Tools and U.S. Barge Drilling segments, driven by increases in drilling activity and the quality and value of our rental tools and barge drilling services.  We also realized an improved operating performance from our international drilling rig fleet, though this was offset by reduced revenues and earnings from our operations and maintenance (O&M) contracts.  In addition, we made progress toward the completion of our two Arctic Alaska Drilling Unit (AADU) rigs," stated Mr. Parker. 

Second Quarter Highlights

• Parker Drilling achieved year-to-year increases of 4 percent in revenues, 7 percent in adjusted EBITDA, 35 percent in net income and 38 percent in earnings per share, excluding non-routine items.
• The Company's Rental Tools segment produced year-to-year increases in revenues and segment gross margin, and benefitted from a growing offshore Gulf of Mexico market that supplemented the contribution from a slowing U.S. land drilling market.  The segment continued to position rental tools inventory in line with the shifting geographic focus of U.S. land drilling and invested in added inventory to meet customer needs. (Gross margins mentioned here and later exclude depreciation and amortization expense).
• The U.S. Gulf of Mexico shallow water drilling market remained active and Parker's U.S. Barge Drilling segment achieved further increases in average dayrate and full utilization of its actively marketed rig fleet. 
• The U.S. Barge Drilling and International Drilling segments contributed significantly to the 2012 second quarter year-to-year increase in operating gross margin. 
• The Company issued an additional $125 million of Senior Notes due 2018, using the proceeds during the quarter to refinance its Convertible Notes that matured in July. 

Outlook

"The market's current uncertainty about future prices for oil and natural gas and the future level of U.S. drilling has begun to lead to slower growth in some U.S. drilling markets and has us alert for changing conditions that may further impact our business.  We believe that our competitive position, geographic and market diversity, and other strategic strengths, position us to face these market challenges and take advantage of competitive opportunities to produce relatively resilient operating results," commented Mr. Parker.  "While the broader application of lateral drilling and the trend toward more complex well designs continue to lead to demand for premium drill pipe and premier customer service, we expect near-term market conditions for rental tools to reflect the recent slower growth in U.S. land drilling. We believe current market prices for oil and natural gas liquids will provide some support to the pace of activity in the U.S. Gulf of Mexico barge drilling market.  Due to current contract terms and market conditions, we expect near-term declines in utilization of our international rig fleet and reduced levels of revenues and earnings from our O&M contract portfolio.  Growing interest among international operators to expand land drilling in several regions where we are focused has led to a notable increase in rig tender requests recently and could provide operational momentum for 2013," he concluded.

Second Quarter Review

Parker Drilling's revenues for the 2012 second quarter increased 4 percent to $178.9 million from revenues of $172.8 million for the 2011 second quarter.  The Company's 2012 second quarter gross margin increased 9 percent to $74.4 million from gross margin of $68.1 million for the 2011 second quarter, while gross margin was 41.6 percent of revenues for the 2012 second quarter compared with 39.4 percent for the 2011 second quarter.  Results for the 2012 second quarter included $1.9 million, pre-tax, of non-routine expenses primarily related to debt extinguishment costs associated with the refinancing of the Company's Convertible Notes. These non-routine items reduced after-tax earnings by $1.3 million or $0.01 per diluted share.  The results for the 2011 second quarter included non-routine, after-tax expense of $1.6 million or $0.01 per diluted share.  Details of the non-routine items are provided in the attached financial tables.

• Rental Tools segment revenues increased 11 percent to $65.0 million from $58.5 million, segment gross margin rose 4 percent to $42.5 million from $40.8 million, and segment gross margin as a percentage of revenues was 65.3 percent compared with 69.7 percent for the prior year's second quarter.  The segment benefitted from the expanded use of lateral drilling and the trend toward more complex well designs in the U.S. land market, and renewed growth in Gulf of Mexico drilling.  Rental tool utilization and pricing in the U.S. land market has trended back to more typical levels, impacting the segment's revenue growth and gross margin.
• U.S. Barge Drilling segment revenues increased 28 percent to $33.3 million from $26.1 million, segment gross margin rose 60 percent to $14.5 million from $9.1 million, and segment gross margin as a percentage of revenues increased to 43.6 percent from 34.7 percent for the prior year's second quarter.  The increase in revenues, segment gross margin and gross margin as a percentage of revenues resulted from higher utilization and an increase in the average dayrate. For the quarter, the business had all eleven of its actively marketed drilling rigs employed, compared with an average of approximately 10.5 barge drilling rigs employed in the 2011 second quarter.  In addition, the barge drilling rig fleet's average dayrate increased 23 percent, to $31,900 for the 2012 second quarter from $26,000 for the 2011 second quarter.  
• U.S. Drilling segment includes two AADU rigs located in Alaska and one land rig located in Louisiana. The AADU rigs are undergoing commissioning and the available land rig is idle. As a result, this segment earned no revenues in the 2012 second quarter and prior periods. The segment's operating costs consist of expenses incurred in preparation for future activities in Alaska, primarily for labor, training and facility leases.
• International Drilling segment revenues declined 4 percent to $76.9 million from $79.7 million, segment gross margin increased 20 percent to $18.2 million from $15.2 million, and segment gross margin as a percentage of revenues increased to 23.7 percent from 19.1 percent for the prior year's second quarter.  The reduction in revenues was primarily driven by significantly lower reimbursable expenses from O&M contracts.  The increases in segment gross margin and gross margin as a percentage of revenues are due to higher average utilization and a higher average dayrate for the Parker Drilling-owned drilling rig fleet.  Average rig fleet utilization for the 2012 second quarter was 51 percent, compared with 48 percent for the prior year's second quarter. 
• Technical Services segment revenues declined 57 percent to $3.7 million from $8.5 million for the prior year's second quarter.  The segment reported a gross margin loss of $0.3 million compared with gross margin of $1.8 million in the prior year's second quarter.  The revenue change was primarily due to the completion of the "pre-operating" phase of the Liberty project in early 2011 and the transition of our role on the Berkut platform project from engineering to construction oversight. The segment's earnings loss reflects retained overhead costs as we transition from recently competed projects.
• The Construction Contract segment includes only the results of activities related to the construction of the BP-owned Liberty rig.  The construction contract for the Liberty rig ended in the 2011 first quarter.  The Construction Contract segment reported no revenues or gross margin in the 2012 second quarter compared with $1.5 million of segment gross margin in the 2011 second quarter.    

2012 Year-to-Date Summary

The Company's results for the first six months of 2012 included net income of $46.5 million or $0.39 per diluted share on revenues of $355.5 million compared with the prior year's first six month net income of $19.0 million or $0.16 per diluted share on revenues of $329.0 million.  Excluding the effects of non-routine items, the Company reported adjusted net income of $47.8 million or $0.40 per diluted share compared with similarly adjusted 2011 first-half net income of $21.0 million or $0.18 per diluted share. Adjusted EBITDA, excluding non-routine items, was $143.5 million for the first six months of 2012 and $105.4 million for the same period of the prior year.

Results for the first six months of 2012 included $2.0 million, pre-tax, of non-routine expenses primarily related to debt extinguishment costs associated with the refinancing of the Company's Convertible Notes. These non-routine items reduced after-tax earnings by $1.3 million or $0.01 per diluted share.  Earnings for the comparable period of 2011 included $2.0 million of after-tax expense for non-routine items. 

Capital Expenditures

Capital expenditures were $50.1 million for the 2012 second quarter and $109.5 for the year-to-date period.  Year-to-date 2012 capital expenditures included $48.5 million for the construction of Parker Drilling's two newbuild arctic land rigs and $41.6 million for the purchase of tubular goods and other rental tools equipment. 

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. CDT (11:00 a.m. EDT) on Thursday, August 2, 2012, to review its reported results.  Those interested in listening to the call by telephone may do so by dialing (480) 629-9868.  The call can also be accessed through the Investor Relations section of the Company's website at http://www.parkerdrilling.com.  A replay of the call can be accessed on the Company's website for 12 months and will be available by telephone from Aug. 2 through Aug. 9 by dialing (303) 590-3030 and using the access code 4553665#.

Cautionary Statement

This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements in this press release other than statements of historical facts that address activities, events or developments that the Company expects, projects, believes, or anticipates will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about anticipated future financial or operational results; the outlook for rig utilization and dayrates; general industry conditions such as the demand for drilling and the factors affecting demand; competitive advantages such as technological innovation; future operating results of the Company's rigs, rental tools operations and projects under management; capital expenditures; expansion and growth opportunities; acquisitions or joint ventures; asset sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs for operation; the strengthening of the Company's financial position; increases in market share; outcomes of legal proceedings and investigations; compliance with credit facility and indenture covenants; and similar matters. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Although the Company believes that its expectations stated in this press release are based on reasonable assumptions, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to changes in worldwide economic and business conditions that could adversely affect market conditions, fluctuations in oil and natural gas prices that could reduce the demand for drilling services, changes in laws or government regulations that could adversely affect the cost of doing business, our ability to refinance our debt and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the Securities and Exchange Commission. See "Risk Factors" in the Company's Annual Report filed on Form 10-K and other public filings and press releases. Each forward-looking statement speaks only as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Company Description

Parker Drilling (NYSE: PKD) provides high-performance contract drilling solutions, rental tools and project management services to the energy industry. Parker Drilling's rig fleet includes 24 land rigs and two offshore barge rigs in international locations, 13 barge rigs in the U.S. Gulf of Mexico, one land rig located in the U.S., and two land rigs in Alaska undergoing commissioning. The Company's rental tools business supplies premium equipment to operators on land and offshore in the U.S. and select international markets. Parker Drilling also performs contract drilling for customer-owned rigs and provides technical services addressing drilling challenges for E&P customers worldwide. More information about Parker Drilling can be found at http://www.parkerdrilling.com, including operating status reports for the Company's Rental Tools segment and its international and U.S. rig fleets, updated monthly.

SOURCE Parker Drilling Company