Press Releases
Parker Drilling Reports Third Quarter 2008 Results
HOUSTON, Nov. 5 /PRNewswire-FirstCall/ -- Parker Drilling Company (NYSE: PKD), a global drilling contractor and service provider, today reported financial and operating results for the third quarter 2008.
The Company earned $0.16 per diluted share, including $0.04 per diluted share adverse impact from non-routine items, as compared to $0.20 per diluted share for the third quarter of 2007. A record performance from the Company's rental tools business and the benefit of higher dayrates and utilization in the Company's international drilling operations were partially offset by the expected softening of the Gulf of Mexico barge rig market and a modest impact from two Gulf of Mexico hurricanes.
"Parker Drilling's third quarter operating results demonstrate the value of our balanced business mix," remarked Robert L. Parker Jr., chairman and chief executive officer. "Our core international markets strengthened and the newest Quail Tools locations targeting unconventional resource plays in North America continued to grow. These two segments combined accounted for more than 60 percent of our revenue in the quarter and helped to offset the impact from the Gulf of Mexico barge drilling market's retreat from its record level of activity in 2007.
"We continue to execute key elements of our strategic growth plan," Parker continued, "driving growth from Quail Tools' expanded operations; commencing rig operations under new contracts in Mexico and Kazakhstan; and winning the Engineering, Procurement, Construction and Installation (EPCI) contract for the BP Liberty ultra-extended reach drilling rig in Alaska and the Front-End Engineering and Design (FEED) contract for the drilling module of the Arkutun-Dagi platform offshore Sakhalin Island in our project management segment.
"With the key elements of our strategy in place, we believe we have created a base for long-term profitable growth for Parker Drilling. As importantly, these should help us minimize the effects of the current downturn. Considering the global economic uncertainties, our strong balance sheet puts us in a solid financial position. Our cash balances, projected cash flow and existing credit facility are sufficient to fund our capital investments for the remainder of 2008 and for all of 2009.
"We remain focused on executing the key elements of our strategic growth plan -- achieving profitable growth in international drilling, rental tools and project management services and being the preferred drilling contractor in the Gulf of Mexico barge rig market," Parker concluded.
Third Quarter Earnings and Financial Review
For the three months ended September 30, 2008, Parker posted net income of $18.6 million, or $0.16 per diluted share, on revenues of $227.5 million, compared to net income of $22.7 million, or $0.20 per diluted share, on revenues of $172.2 million for the third quarter 2007. Net income in the third quarter of 2008 included $3.7 million of non-routine expenses relating to costs associated with the previously disclosed investigation by the Department of Justice regarding the Company's utilization of the services of a customs agent in certain countries and a non-cash charge to taxes identified and accounted for under Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48). Net income in the third quarter of 2007 included net expense of $1.6 million or $0.02 per diluted share relating to $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 FIN 48.
Adjusted EBITDA was $73.7 million for the third quarter 2008 compared to $74.2 million in the third quarter 2007 and up sequentially from $69.7 million in the second quarter. (Adjusted EBITDA is a non-GAAP financial measure defined below). Higher dayrates and utilization resulted in a 32 percent EBITDA improvement for Parker's international operations over the third quarter 2007. Rental Tools achieved record EBITDA of $27.8 million, which topped the record set in the fourth quarter of 2007. EBITDA for the U.S. drilling segment was $22.9 million, compared to $33.7 million in the third quarter of 2007. For the first nine months of 2008, total EBITDA was $204.4 million, a 6 percent increase over the $192.1 million for the first nine months of 2007.
For the first nine months of 2008, Parker reported record revenues of $617.5 million and net income of $65.0 million or $0.58 per diluted share compared to revenues of $473.7 million and net income of $69.5 million or $0.63 per diluted share for the first nine months of 2007. Included in 2008 results is a net $0.4 million expense from non-routine items. Included in 2007 results are an after-tax gain of $0.07 per diluted share from the sale of two workover barge rigs in January 2007 and non-cash FIN 48 charges of $0.05 per diluted share.
The details of the non-routine items for the 2008 first, second and third quarters and year-to-date, 2006 and 2007 are available on Parker's website and can be viewed or downloaded by going to "Investor Relations" and then to "Reconciliation of Non-Routine Items".
Capital expenditures for the nine months ended September 30, 2008 totaled $157.3 million. Total debt was $413.2 million, and total debt to capitalization was 40 percent. The Company's cash and cash equivalents totaled $75.3 million at September 30, 2008.
Average utilization for the Gulf of Mexico barge rigs for the third quarter 2008 was 79 percent, compared to the 83 percent reported for the third quarter 2007 and the 91 percent reported for the second quarter 2008. Current barge rig utilization is 67 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico averaged $44,300 per day during the third quarter 2008, compared to $47,900 per day in the third quarter 2007 and $43,300 per day in the second quarter 2008. (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.")
With three rigs mobilizing under contracts secured in the second quarter, including the addition of newbuild rig 269 in Kazakhstan, average utilization of international land rigs for the third quarter 2008 increased to 82 percent, up from the 75 percent reported for the second quarter 2008 and the third quarter 2007.
Operations Highlights
-- Rig 121 mobilized for a four-year contract in northern Mexico and spud in September, bringing the total number of contracted Parker rigs in Mexico to eight.
-- Rig 269, the first of Parker's newbuild high-efficiency class land rigs, mobilized to Kazakhstan and spud in August, joining land rig 247. Parker now has eight contracted rigs in Kazakhstan.
-- As discussed above, the Company announced two new contracts in its project management business. In July, Parker announced a new EPCI contract for the land-based BP Liberty rig, designed to drill ultra extended-reach wells to offshore targets in the Liberty field of the Alaskan Beaufort Sea, and in August, the company announced a new FEED contract to design the drilling package for the Sakhalin-1 Arkutun-Dagi offshore platform.
Parker Drilling has scheduled a conference call at 10 a.m. CST (11 a.m. EST) on Wednesday, Nov. 5, 2008 to discuss third quarter 2008 results. Those interested in listening to the call by telephone may do so by dialing (303) 262-2053. Alternatively, the call can be accessed live through the Investor Relations section of the Company's Web site at http://www.parkerdrilling.com. A replay of the call can be accessed on the Company's Web site for 12 months, or by telephone from Nov. 5 through Nov. 12 by dialing (800) 405-2236 and using the access code 11120913#.
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 and the factors affecting demand, competitive advantages including cost effective integrated solutions and technological innovation, 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 and execution 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 due to certain risk factors, including the ongoing credit crisis which has created volatility in oil and natural gas prices and could result in reduced demand for drilling services. 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, 2007 and the risk factors in our Form 10-Q for the period ended June 30, 2008. 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,
2008 2007 2008 2007
(Dollars in Thousands)
REVENUES:
U.S. Drilling $44,743 $56,918 $139,999 $174,375
International Drilling 92,226 58,857 238,885 143,834
Project Management and
Engineering Services 24,089 20,922 72,219 58,633
Construction Contract 20,421 - 40,501 -
Rental Tools 45,975 35,500 125,858 96,905
TOTAL REVENUES 227,454 172,197 617,462 473,747
OPERATING EXPENSES:
U.S. Drilling 21,850 23,208 65,502 74,101
International Drilling 63,682 37,288 172,915 101,853
Project Management and
Engineering Services 21,451 16,685 61,819 49,004
Construction Contract 19,323 - 38,373 -
Rental Tools 18,166 14,579 50,014 38,263
Depreciation and
Amortization 30,663 23,043 84,995 60,744
TOTAL OPERATING EXPENSES 175,135 114,803 473,618 323,965
TOTAL OPERATING GROSS
MARGIN 52,319 57,394 143,844 149,782
General and Administrative
Expense (9,271) (6,246) (24,420) (18,380)
Provision for Reduction in
Carrying Value of Certain
Assets - (1,091) - (1,091)
Gain on Disposition of
Assets, Net 799 543 2,014 17,216
TOTAL OPERATING INCOME 43,847 50,600 121,438 147,527
OTHER INCOME AND (EXPENSE):
Interest Expense (5,820) (7,576) (17,386) (19,891)
Change in Fair Value of
Derivative Positions - (262) - (671)
Interest Income 383 2,080 1,121 5,576
Loss on Extinguishment
of Debt - (2,396) - (2,396)
Equity in Loss of
Unconsolidated Joint
Venture and Related
Charges, Net of Taxes - (1,123) (1,105) (1,123)
Minority Interest - - - (1,000)
Other Income 299 510 503 587
TOTAL OTHER INCOME AND
(EXPENSE) (5,138) (8,767) (16,867) (18,918)
INCOME BEFORE INCOME
TAXES 38,709 41,833 104,571 128,609
INCOME TAX EXPENSE:
Current Tax Expense 14,179 14,598 13,024 43,223
Deferred Tax Expense 5,979 4,582 26,512 15,879
TOTAL INCOME TAX EXPENSE 20,158 19,180 39,536 59,102
NET INCOME $18,551 $22,653 $65,035 $69,507
EARNINGS PER SHARE - BASIC
Net Income $0.17 $0.21 $0.58 $0.64
EARNINGS PER SHARE - DILUTED
Net Income $0.16 $0.20 $0.58 $0.63
NUMBER OF COMMON SHARES
USED IN COMPUTING
EARNINGS PER SHARE
Basic 111,756,322 110,270,207 111,243,745 109,269,867
Diluted 112,647,450 111,278,430 112,324,566 110,522,914
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Dollars in Thousands)
September 30, December 31,
2008 2007
ASSETS (Unaudited)
CURRENT ASSETS
Cash and Cash Equivalents $75,277 $60,124
Accounts and Notes Receivable, Net 217,104 166,706
Rig Materials and Supplies 29,914 24,264
Deferred Costs 8,528 7,795
Deferred Income Taxes 9,424 9,423
Other Current Assets 40,871 54,871
TOTAL CURRENT ASSETS 381,118 323,183
PROPERTY, PLANT AND EQUIPMENT, NET 653,119 585,888
OTHER ASSETS
Goodwill 100,315 100,315
Deferred Income Taxes 11,838 40,121
Other Assets 31,753 27,480
TOTAL OTHER ASSETS 143,906 167,916
TOTAL ASSETS $1,178,143 $1,076,987
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt $3,000 $20,000
Accounts Payable and Accrued Liabilities 127,762 104,180
TOTAL CURRENT LIABILITIES 130,762 124,180
LONG-TERM DEBT 410,235 353,721
LONG-TERM DEFERRED TAX LIABILITY 8,506 8,044
OTHER LONG-TERM LIABILITIES 20,820 56,318
STOCKHOLDERS' EQUITY 607,820 534,724
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,178,143 $1,076,987
Current Ratio 2.91 2.60
Total Long-Term Debt as a Percent of
Capitalization 40% 41%
Book Value Per Common Share $5.36 $4.78
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
Three Months Ended
September 30, June 30,
2008 2007 2008
(Dollars in Thousands)
REVENUES:
U.S. Offshore Drilling $44,743 $55,416 $49,368
U.S. Land Drilling - 1,502 -
International Land Drilling 74,940 48,836 64,255
International Offshore Drilling 17,286 10,021 13,664
Project Management and Engineering
Services 24,089 20,922 28,951
Construction Contract 20,421 - 20,080
Rental Tools 45,975 35,500 40,412
Total Revenues 227,454 172,197 216,730
OPERATING EXPENSES:
U.S. Offshore Drilling 21,850 22,103 22,130
U.S. Land Drilling - 1,105 -
International Land Drilling 57,564 30,636 50,659
International Offshore Drilling 6,118 6,652 5,953
Project Management and Engineering
Services 21,451 16,685 24,707
Construction Contract 19,323 - 19,050
Rental Tools 18,166 14,579 16,030
Total Operating Expenses 144,472 91,760 138,529
OPERATING GROSS MARGIN:
U.S. Offshore Drilling 22,893 33,313 27,238
U.S. Land Drilling - 397 -
International Land Drilling 17,376 18,200 13,596
International Offshore Drilling 11,168 3,369 7,711
Project Management and Engineering
Services 2,638 4,237 4,244
Construction Contract 1,098 - 1,030
Rental Tools 27,809 20,921 24,382
Depreciation and Amortization (30,663) (23,043) (28,166)
Total Operating Gross Margin 52,319 57,394 50,035
General and Administrative Expense (9,271) (6,246) (8,481)
Provision for Reduction in Carrying
Value of Certain Assets - (1,091) -
Gain on Disposition of Assets, Net 799 543 636
TOTAL OPERATING INCOME $43,847 $50,600 $42,190
Marketable Rig Count Summary
As of September 30, 2008
Total
U.S. Gulf of Mexico Barge Rigs
Workover 2
Intermediate 3
Deep 10
Total U.S. Gulf of Mexico Barge Rigs 15
International Land Rigs
Asia Pacific 8
Africa - Middle East 2
Latin America 9
CIS 9
Total International Land Rigs 28
International Barge Rigs
Mexico 1
Caspian Sea 1
Total International Barge Rigs 2
Total Marketable Rigs 45
Adjusted EBITDA
(Unaudited)
(Dollars in Thousands)
Three Months Ending
September June 30, March 31, December September
30, 2008 2008 2008 31, 2007 30, 2007
Net Income from
Continuing
Operations $18,551 $22,596 $23,888 $34,571 $22,653
Adjustments:
Income Tax
(Benefit) Expense 20,158 14,232 5,146 (21,379) 19,180
Total Other Income
and Expense 5,138 5,362 6,367 30,264 8,767
Loss/(Gain) on
Disposition of
Assets, Net (799) (636) (579) 784 (543)
Depreciation and
Amortization 30,663 28,166 26,166 25,059 23,043
Provision for
Reduction in
Carrying Value
of Certain
Assets - - - 371 1,091
Adjusted EBITDA $73,711 $69,720 $60,988 $69,670 $74,191
Three Months Ending
June 30, March 31, December 31, September 30,
2007 2007 2006 2006
Net Income from Continuing
Operations $16,860 $29,994 $37,168 $18,639
Adjustments:
Income Tax (Benefit)
Expense 15,813 24,109 (5,954) 13,173
Total Other Income
and Expense 4,231 5,920 3,554 8,741
Loss/(Gain) on
Disposition of
Assets, Net (269) (16,404) (672) (4,328)
Depreciation and
Amortization 19,642 18,059 17,605 16,993
Provision for Reduction
in Carrying Value of
Certain Assets - - - -
Adjusted EBITDA $56,277 $61,678 $51,701 $53,218
SOURCE Parker Drilling Company
Released November 5, 2008