Press Releases
Parker Drilling Third Quarter 2007 EBITDA Increases 39 Percent to $74 Million
HOUSTON, Nov. 7 /PRNewswire-FirstCall/ -- Parker Drilling Company (NYSE: PKD), a global drilling contractor and service provider, today reported strong financial and operating results for the third quarter 2007. Highlights include:
* Earnings before interest, taxes, depreciation and amortization
(EBITDA) increased 39 percent over the third quarter 2006;
* Net income increased 22 percent over the third quarter 2006;
* EBITDA generated by Parker's international land drilling segment
nearly tripled in comparison to the third quarter of 2006;
* Both U.S. barge rig operations and Quail Tools generated record
EBITDA;
* International land rig utilization increased to 75 percent, up from
55 percent in the third quarter last year;
* Remaining Floating Rate Notes of $100 million were redeemed;
* An Amended and Restated Credit Agreement was finalized, increasing
available credit from $40 million to $60 million and extending the
facility for five years.
Robert L. Parker Jr., chairman and chief executive officer of Parker Drilling, said: "All three of our operating segments turned in excellent performances during the third quarter. As forecast, these results were driven by dramatically increased contributions from our international operations and a record quarter for both Quail Tools and our U.S. barge rig operations."
Third Quarter Earnings and Financial Highlights
For the three months ended September 30, 2007, Parker reported earnings of $22.7 million, or $0.20 per diluted share, on revenues of $172.2 million for the third quarter ended September 30, 2007, compared to revenues of $146.8 million and net income of $18.6 million or $0.17 per diluted share for the third quarter of 2006. Net income in the third quarter of 2007 included net expense of $1.6 million or $0.02 per diluted share, which was the result of $2.4 million of debt extinguishment cost, $1.1 million provision for carrying value and a non-cash credit to tax expense of $0.5 million for potential interest and exchange rate fluctuations relating to a tax liability recorded on January 1, 2007, associated with the adoption of the Financial Accounting Standards Board (FASB) Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $74.2 million for the third quarter of 2007, 39 percent higher than the $53.2 million reported in the third quarter of 2006. Higher dayrates and utilization resulted in a seven percent EBITDA improvement for Parker's U.S. Gulf of Mexico barge rigs over the prior year's quarter. Quail Tools, Parker's drilling and production rental tools subsidiary, also achieved record EBITDA of $20.9 million, which topped the record set in the third quarter of 2006. For the first nine months of 2007, total EBITDA was $192.1 million, a 25 percent increase over the $153.3 million for 2006. (The details of the EBITDA calculation, a non-GAAP financial measure, for the current and prior eight quarters are defined and reconciled later in this press release to their most directly comparable GAAP financial measure.)
For the first nine months of 2007, Parker reported revenues of $473.7 million and net income of $69.5 million or $0.63 per diluted share compared to revenues of $440.1 million and net income of $43.9 million or $0.41 per diluted share for the first nine months of 2006. Included in 2007 results is an after-tax gain of $0.07 per diluted share from the sale of two workover barge rigs in January, non-cash FIN 48 charges of $0.05 per diluted share and after-tax charges of $0.02 per diluted share for debt extinguishment and provision for carrying value. Included in 2006 results was net income of $0.02 per diluted share for gains recorded on the disposition of two Nigerian barges and US barge rig 57, offset by debt extinguishment costs.
Capital expenditures for the nine months ended September 30, 2007 totaled $191.4 million. Total debt increased to $354 million due to the issuance of $125 million of Convertible Notes and subsequent redemption of $100 million of our Floating Rate notes. The Company's cash, cash equivalents and marketable securities totaled $67.0 million at September 30, 2007.
Average utilization for barge rigs drilling in the Gulf of Mexico transition zone for the third quarter 2007 was 83 percent, up from the 72 percent reported for the third quarter 2006 and the 74 percent reported for the second quarter 2007. Current barge rig utilization is 81 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico were up approximately $2,100 per day from the third quarter 2006, but decreased to $47,900 from the record level of $51,600 per day posted during the second quarter 2007. (Average dayrates for each classification of barge by quarter are available on Parker's website and can be viewed or downloaded by going to "Investor Relations" and then to "Dayrates - GOM.")
The average utilization of international land rigs for the third quarter 2007 increased to 75 percent, up from the 71 percent reported for the second quarter 2007 and 55 percent in the third quarter 2006. Current international utilization is 82 percent and is expected to further increase during 2007 as rigs continue to reposition to new contracts.
Summary
Parker continued, "Internationally, we began to realize the substantial benefits of repositioning our international fleet to long-term contracts with strong margins, and we anticipate this performance to continue, as demonstrated in today's announcement of new contracts in Mexico and Kazakhstan.
"North Africa/Middle East is a strategic, long-term growth market for us and the scope of our Saudi Arabian joint venture is significant. By early next year, we expect to have six rigs working under three-year initial commitments for drilling with the option to extend to a fourth year. The joint venture, however, has experienced delays and cost overruns during the construction and commissioning phase of the project and as a result, we recognized a $1.1 million non-cash charge. We also plan to invest an additional $20 to $25 million to finish construction and commissioning of the rigs and expect to have all six rigs operational by the second quarter of 2008, solidifying our initial presence in this strategic market.
"Quail Tools quickly rebounded from a flat second quarter with record- breaking third quarter results. The $50 million expansion of Quail was completed during the third quarter, and results reflect added rental tools and the impact of Quail's new facility in Texarkana, Texas. We continue to remain confident in the growth of this segment.
"We expect that fourth quarter and early 2008 contributions from our U.S. segment will remain substantial but slightly lower than previous quarters due to a moderate decline in dayrates and utilization, as one of our deep barge rigs was down in October and some intermediate barge rigs may experience gaps
between contracts in the fourth quarter. However, all of our deep barge rigs are now committed through the remainder of 2007.
"Demand is strong for our brand of high-performance drilling solutions that reduce the total cost of drilling and enable our customers to explore and develop oil and gas reserves in frontier environments. Looking ahead to the remainder of this year and into 2008, I am confident we will continue to deliver strong returns across our operating segments and execute our strategic growth plan."
Parker Drilling has scheduled a conference call at 10 a.m. CST (11 a.m. EST) November 7, 2007 to discuss third quarter 2007 results. Those interested in participating in the call may dial in at 303-262-2137. The conference call replay can be accessed from November 7 through November 14 by dialing (800) 405-2236 and using the access code 11099460#. Alternatively, the call can be accessed live through the Company's website at http://www.parkerdrilling.com and will be archived on the site for 12 months.
This release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Securities Acts. All statements, 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, including earnings per share guidance, the outlook for rig utilization and dayrates, general industry conditions including demand for drilling and customer spending, competitive advantages including cost effective integrated solutions, future technological innovation, future operating results of the Company's rigs and rental tool operations, capital expenditures, expansion and growth opportunities, asset sales, successful negotiation of contracts, strengthening of financial position, increase in market share and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this release are based on reasonable assumptions, actual results may differ materially from those expressed or implied in the forward-looking statements. For a detailed discussion of risk factors that could cause actual results to differ materially from the Company's expectations, please refer to the Company's reports filed with the SEC, and in particular, the report on Form 10-K for the year ended December 31, 2006. Each forward-looking statement speaks only as of the date of this release, and the Company undertakes no obligation to publicly update or revise any forward- looking statement.
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
(Dollars in Thousands) (Dollars in Thousands)
DRILLING AND RENTAL
REVENUES
U.S. Drilling $59,700 $52,347 $178,975 $135,297
International Drilling 76,997 61,605 197,867 214,407
Rental Tools 35,500 32,831 96,905 90,401
TOTAL DRILLING AND
RENTAL REVENUES 172,197 146,783 473,747 440,105
DRILLING AND RENTAL
OPERATING EXPENSES
U.S. Drilling 25,563 20,944 76,940 58,228
International Drilling 51,618 52,280 148,018 171,506
Rental Tools 14,579 12,349 38,263 33,788
Depreciation and
Amortization 23,043 16,993 60,744 51,665
TOTAL DRILLING AND
RENTAL OPERATING
EXPENSES 114,803 102,566 323,965 315,187
DRILLING AND RENTAL
OPERATING INCOME 57,394 44,217 149,782 124,918
General and Administrative
Expense (6,246) (7,992) (18,380) (23,261)
Provision for Reduction
in Carrying Value of
Certain Assets (1,091) - (1,091) -
Gain on Disposition of
Assets, Net 543 4,328 17,216 6,901
TOTAL OPERATING INCOME 50,600 40,553 147,527 108,558
OTHER INCOME AND (EXPENSE)
Interest Expense (7,576) (7,923) (19,891) (25,223)
Change in Fair Value
of Derivative Position (262) (1,029) (671) 166
Interest Income 2,080 2,521 5,576 5,966
Loss on Extinguishment
of Debt (2,396) (1,910) (2,396) (1,912)
Equity in Loss of
Unconsolidated Joint
Venture, Net of Taxes (1,123) - (1,123) -
Other Income (Expense)
- Net 510 (400) (413) (1,334)
TOTAL OTHER INCOME AND
(EXPENSE) (8,767) (8,741) (18,918) (22,337)
INCOME BEFORE INCOME TAXES 41,833 31,812 128,609 86,221
INCOME TAX EXPENSE
Current Tax Expense 14,598 1,166 43,223 10,692
Deferred Tax Expense 4,582 12,007 15,879 31,671
TOTAL INCOME TAX EXPENSE 19,180 13,173 59,102 42,363
NET INCOME $22,653 $18,639 $69,507 $43,858
EARNINGS PER SHARE - BASIC
Net Income $0.21 $0.17 $0.64 $0.41
EARNINGS PER SHARE - DILUTED
Net Income $0.20 $0.17 $0.63 $0.41
AVERAGE COMMON SHARES
OUTSTANDING
Basic 110,270,207 107,233,881 109,269,867 106,272,123
Diluted 111,278,430 108,211,580 110,522,914 107,766,841
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
September 30, 2007 December 31, 2006
ASSETS (Dollars in Thousands)
CURRENT ASSETS
Cash and Cash Equivalents $66,954 $92,203
Marketable Securities - 62,920
Accounts and Notes Receivable, Net 161,500 112,359
Rig Materials and Supplies 21,509 15,000
Deferred Costs 9,872 6,662
Deferred Income Taxes 17,307 17,307
Other Current Assets 44,663 11,123
TOTAL CURRENT ASSETS 321,805 317,574
PROPERTY, PLANT AND EQUIPMENT, NET 562,952 435,473
OTHER ASSETS
Goodwill 100,315 100,315
Deferred Taxes 21,179 13,405
Other Assets 74,689 34,534
TOTAL OTHER ASSETS 196,183 148,254
TOTAL ASSETS $1,080,940 $901,301
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt $- $-
Accounts Payable and Accrued
Liabilities 104,282 101,903
TOTAL CURRENT LIABILITIES 104,282 101,903
LONG-TERM DEBT 353,882 329,368
LONG-TERM DEFERRED TAXES 15,181 -
OTHER LIABILITIES 110,009 10,931
STOCKHOLDERS' EQUITY 497,586 459,099
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,080,940 $901,301
Current Ratio 3.09 3.12
Total Long-Term Debt as a Percent of
Capitalization 42% 42%
Book Value Per Common Share $4.45 $4.21
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
Three Months Ended
September 30, June 30,
2007 2006 2007
DRILLING AND RENTAL REVENUES (Dollars in Thousands)
U.S. Offshore Drilling $58,197 $52,347 $54,316
U.S. Land Drilling 1,503 - 3,335
International Land Drilling 66,976 48,146 52,268
International Offshore Drilling 10,021 13,459 8,928
Rental Tools 35,500 32,831 31,430
Total Drilling and Rental
Revenues 172,197 146,783 150,277
DRILLING AND RENTAL OPERATING
EXPENSES
U.S. Offshore Drilling 24,457 20,944 21,551
U.S. Land Drilling 1,106 - 3,065
International Land Drilling 44,966 40,491 45,019
International Offshore Drilling 6,652 11,789 5,598
Rental Tools 14,579 12,349 12,521
Total Drilling and Rental
Operating Expenses 91,760 85,573 87,754
DRILLING AND RENTAL OPERATING INCOME
U.S. Offshore Drilling 33,740 31,403 32,765
U.S. Land Drilling 397 - 270
International Land Drilling 22,010 7,655 7,249
International Offshore Drilling 3,369 1,670 3,330
Rental Tools 20,921 20,482 18,909
Depreciation and Amortization (23,043) (16,993) (19,642)
Total Drilling and Rental
Operating Income 57,394 44,217 42,881
General and Administrative Expense (6,246) (7,992) (6,246)
Provision for Reduction in Carrying
Value of Certain Assets (1,091) - -
Gain on Disposition of Assets, Net 543 4,328 269
TOTAL OPERATING INCOME $50,600 $40,553 $36,904
Marketable Rig Count Summary
As of September 30, 2007
Total
U.S. Land Rigs 1
U.S. Gulf of Mexico Barge Rigs
Workover 3
Intermediate 3
Deep 10
Total U.S. Gulf of Mexico Barge Rigs 16
International Land Rigs
Asia Pacific 9
Africa - Middle East 3
Latin America 7
CIS 8
Total International Land Rigs 27
International Barge Rigs
Mexico 1
Caspian Sea 1
Total International Barge Rigs 2
Total Marketable Rigs 46
Adjusted EBITDA
(Unaudited)
Three Months Ending
September 30, June 30, March 31,
2007 2007 2007
Income (Loss) from Continuing
Operations $22,653 $18,103 $29,994
Adjustments:
Income Tax Expense 19,179 14,570 24,109
Total Other Income and Expense 8,768 4,231 5,920
Loss/(Gain) on Disposition of Assets,
Net (543) (269) (16,404)
Depreciation and Amortization 23,043 19,642 18,059
Provision for Reduction in Carrying
Value 1,091 - -
Adjusted EBITDA $74,191 $56,277 $61,678
Three Months Ending
December 31, September 30, June 30,
2006 2006 2006
Income (Loss) from Continuing
Operations $37,168 $18,639 $13,761
Adjustments:
Income Tax Expense (5,954) 13,173 14,694
Total Other Income and Expense 3,554 8,741 5,731
Loss/(Gain) on Disposition of Assets,
Net (672) (4,328) (2,125)
Depreciation and Amortization 17,605 16,993 17,715
Provision for Reduction in Carrying
Value - - -
Adjusted EBITDA $51,701 $53,218 $49,776
Three Months Ending
March 31, December 31, September 30,
2006 2005 2005
Income (Loss) from Continuing
Operations $11,458 $56,707 $18,073
Adjustments:
Income Tax Expense 14,496 (39,087) 2,165
Total Other Income and Expense 7,865 10,251 9,627
Loss/(Gain) on Disposition of Assets,
Net (448) (3,185) (5,943)
Depreciation and Amortization 16,957 16,619 16,563
Provision for Reduction in Carrying
Value - 2,584 2,300
Adjusted EBITDA $50,328 $43,889 $42,785
SOURCE Parker Drilling Company
Released November 7, 2007