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, 2012

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

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

13.

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

Set forth on the following pages are the consolidating condensed financial statements of Parker Drilling. Our 9.125% Notes are guaranteed by substantially all of its direct and indirect domestic subsidiaries other than immaterial subsidiaries generating revenue primarily outside the United States. There are currently no restrictions on the ability of the guarantor 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 we comply 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 Parker Drilling, 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, 2012 and December 31, 2011 and for the three and six months ended June 30, 2012 and 2011. 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, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	28,231		$	10,266		$	38,970		$	—		$	77,467
Accounts and notes receivable, net		289,720			107,730			282,476			(503,736	)		176,190
Rig materials and supplies		—			(1,044	)		25,290			—			24,246
Deferred costs		—			—			2,859			—			2,859
Deferred income taxes		—			4,940			1,440			—			6,380
Other tax assets		77,635			(47,411	)		4,293			—			34,517
Assets held for sale		—			—			5,312			—			5,312
Other current assets		722			5,144			6,497			—			12,363

Total current assets		396,308			79,625			367,137			(503,736	)		339,334

Property, plant and equipment, net		60			544,681			226,020			(0	)		770,761
Investment in subsidiaries and intercompany advances		776,638			(257,178	)		1,384,083			(1,903,543	)		—
Other noncurrent assets		40,616			68,171			18,484			—			127,271

Total assets	$	1,213,622		$	435,299		$	1,995,724		$	(2,407,279	)	$	1,237,366

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	51,136		$	—		$	—		$	—		$	51,136
Accounts payable and accrued liabilities		63,599			71,396			190,474			(218,008	)		107,461
Accrued income taxes		(920	)		1,444			4,747			—			5,271

Total current liabilities		113,815			72,840			195,221			(218,008	)		163,868

Long-term debt		429,888			—			—			—			429,888
Other long-term liabilities		8,263			6,912			14,360			—			29,535
Long-term deferred tax liability		2,229			27,870			(12,269	)		—			17,830
Intercompany payables		62,584			43,657			103,625			(209,866	)		—
Contingencies		—			—			—			—			—
Stockholders’ equity:
Common stock		19,696			18,049			43,003			(61,052	)		19,696
Capital in excess of par value		642,616			733,112			1,449,633			(2,182,745	)		642,616
Retained earnings (accumulated deficit)		(65,469	)		(467,141	)		202,749			264,392			(65,469	)

Total controlling interest stockholders’ equity		596,843			284,020			1,695,385			(1,979,405	)		596,843

Noncontrolling interest		—			—			(598	)		—			(598	)

Total Equity		596,843			284,020			1,694,787			(1,979,405	)		596,245

Total liabilities and stockholders’ equity	$	1,213,622		$	435,299		$	1,995,724		$	(2,407,279	)	$	1,237,366

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED BALANCE SHEET

(Dollars in Thousands)

(Unaudited)


	December 31, 2011
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	55,670		$	4,212		$	37,987		$	—		$	97,869
Accounts and notes receivable, net		289,512			94,748			285,326			(485,663	)		183,923
Rig materials and supplies		—			762			29,185			—			29,947
Deferred costs		—			—			3,249			—			3,249
Deferred income taxes		—			5,311			853			486			6,650
Other tax assets		47,834			(25,218	)		2,742			—			25,358
Assets held for sale		—			—			5,315			—			5,315
Other current assets		788			6,381			8,133			—			15,302

Total current assets		393,804			86,196			372,790			(485,177	)		367,613

Property, plant and equipment, net		79			474,942			244,787			1			719,809
Investment in subsidiaries and intercompany advances		720,214			(212,883	)		1,347,719			(1,855,050	)		—
Other noncurrent assets		44,962			66,660			16,839			363			128,824

Total assets	$	1,159,059		$	414,915		$	1,982,135		$	(2,339,863	)	$	1,216,246

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	145,723		$	—		$	—		$	—		$	145,723
Accounts payable and accrued liabilities		60,120			94,056			181,010			(199,936	)		135,250
Accrued income taxes		(205	)		921			4,121			—			4,837

Total current liabilities		205,638			94,977			185,131			(199,936	)		285,810

Long-term debt		337,000			—			—			—			337,000
Other long-term liabilities		8,081			9,474			15,897			—			33,452
Long-term deferred tax liability		1,151			25,232			(11,296	)		847			15,934
Intercompany payables		62,583			43,657			111,619			(217,859	)		—
Contingencies		—			—			—			—			—

Stockholders’ equity:
Common stock		19,508			18,049			43,003			(61,052	)		19,508
Capital in excess of par value		637,042			733,120			1,444,091			(2,177,211	)		637,042
Retained earnings (accumulated deficit)		(111,944	)		(509,594	)		194,246			315,348			(111,944	)

Total controlling interest stockholders’ equity		544,606			241,575			1,681,340			(1,922,915	)		544,606

Noncontrolling interest		—			—			(556	)		—			(556	)

Total Equity		544,606			241,575			1,680,784			(1,922,915	)		544,050

Total liabilities and stockholders’ equity	$	1,159,059		$	414,915		$	1,982,135		$	(2,339,863	)	$	1,216,246

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Three months ended June 30, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	104,767		$	98,036		$	(23,878	)	$	178,925
Operating expenses		—			47,632			80,772			(23,878	)		104,526
Depreciation and amortization		—			15,665			12,294			—			27,959

Total operating gross margin		—			41,470			4,970			—			46,440

General and administration expense ⁽¹⁾		(44	)		(7,078	)		(298	)		—			(7,420	)
Gain on disposition of assets, net		—			197			1,171			—			1,368

Total operating income (loss)		(44	)		34,589			5,843			—			40,388

Other income and (expense):
Interest expense		(9,817	)		(35	)		(2,023	)		2,950			(8,925	)
Interest income		8,504			4,537			34,070			(47,058	)		53
Loss on extinguishment of debt		(1,649	)		—			—			—			(1,649	)
Changes in fair value of derivative positions		38			—			—			—			38
Other		—			23			(3	)		—			20
Equity in net earnings of subsidiaries		19,057			—			—			(19,057	)		—

Total other income (expense)		16,133			4,525			32,044			(63,165	)		(10,463	)

Income (benefit) before income taxes		16,089			39,114			37,887			(63,165	)		29,925
Income tax expense (benefit)		(3,994	)		13,668			143			—			9,817

Net income (loss)		20,083			25,446			37,744			(63,165	)		20,108

Less: Net income attributable to noncontrolling interest		—			—			25			—			25

Net income (loss) attributable to controlling interest	$	20,083		$	25,446		$	37,719		$	(63,165	)	$	20,083

(1)	General and administration expenses for field operations are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES

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		—			41,224			86,405			(22,946	)		104,683
Depreciation and amortization		—			15,387			11,945			—			27,332

Total operating gross margin		—			38,824			1,973			—			40,797

General and administration expense ⁽¹⁾		(83	)		(7,798	)		(67	)		—			(7,948	)
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
Change in fair value of derivative position		(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)		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 income (loss) attributable to controlling interest	$	14,174		$	14,841		$	21,952		$	(36,794	)	$	14,173

(1)	General and administration expenses for field operations are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands)

(Unaudited)


	Six months ended June 30, 2012
	Parent			Guarantor			Non-Guarantor			Eliminations			Consolidated
Total revenues	$	—		$	203,924		$	201,061		$	(49,491	)	$	355,494
Operating expenses		—			90,999			157,950			(49,491	)		199,458
Depreciation and amortization		—			31,261			24,317			—			55,578

Total operating gross margin		—			81,664			18,794			—			100,458

General and administration expense ⁽¹⁾		(90	)		(12,450	)		(377	)		—			(12,917	)
Gain on disposition of assets, net		—			615			1,245			—			1,860

Total operating income (loss)		(90	)		69,829			19,662			—			89,401

Other income and (expense):
Interest expense		(18,818	)		(71	)		(3,972	)		5,899			(16,962	)
Interest income		8,600			4,715			36,771			(50,007	)		79
Loss on extinguishment of debt		(1,649	)		—			—			—			(1,649	)
Changes in fair value of derivative positions		(11	)		—			—			—			(11	)
Other		—			36			—			—			36
Equity in net earnings of subsidiaries		50,957			—			—			(50,957	)		—

Total other income (expense)		39,079			4,680			32,799			(95,065	)		(18,507	)

Income (benefit) before income taxes		38,989			74,509			52,461			(95,065	)		70,894
Income tax expense (benefit)		(7,486	)		27,698			4,248			—			24,460

Net income (loss)		46,475			46,811			48,213			(95,065	)		46,434

Less: Net (loss) attributable to noncontrolling interest		—			—			(41	)		—			(41	)

Net income (loss) attributable to controlling interest	$	46,475		$	46,811		$	48,254		$	(95,065	)	$	46,475

(1)	General and administration expenses for field operations are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES

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		—			91,628			182,694			(62,263	)		212,059
Depreciation and amortization		—			30,597			24,334			—			54,931

Total operating gross margin		—			60,615			1,386			—			62,001

General and administration expense ⁽¹⁾		(128	)		(14,495	)		(129	)		—			(14,752	)
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
Change in fair value of derivative positions		(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)		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 income (loss) attributable to controlling interest	$	19,001		$	21,652		$	19,107		$	(40,759	)	$	19,001

(1)	General and administration expenses for field operations are included in operating expenses.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Six Months Ended June 30, 2012
	Parent			Guarantor			Non— Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	46,475		$	46,811		$	48,213		$	(95,065	)	$	46,434
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		—			31,261			24,317			—			55,578
Loss on extinguishment of debt		1,649			—			—			—			1,649
Gain on disposition of assets		—			(615	)		(1,245	)		—			(1,860	)
Deferred income tax expense		7,025			3,832			(425	)		—			10,432
Expenses not requiring cash		10,737			716			336			—			11,789
Equity in net earnings of subsidiaries		(50,957	)		—			—			50,957			—
Change in accounts receivable		(208	)		(11,248	)		20,617			—			9,161
Change in other assets		(29,586	)		22,490			(42	)		—			(7,138	)
Change in accrued income taxes		(766	)		1,042			647			—			923
Change in liabilities		2,402			(25,239	)		(8,600	)		—			(31,437	)

Net cash provided by (used in) operating activities		(13,229	)		69,050			83,818			(44,108	)		95,531

Cash flows from investing activities:
Capital expenditures		—			(103,855	)		(5,676	)		—			(109,531	)
Proceeds from the sale of assets		—			906			1,434			—			2,340
Intercompany dividend payment		(8,387	)		(4,357	)		(31,364	)		44,108			—

Net cash (used in) investing activities		(8,387	)		(107,306	)		(35,606	)		44,108			(107,191	)

Cash flows from financing activities:
Proceeds from debt issuance		130,000			—			—			—			130,000
Paydown on senior notes		(122,852	)		—			—			—			(122,852	)
Paydown on term note		(12,000	)		—			—			—			(12,000	)
Payment of debt issuance costs		(3,537	)		—			—			—			(3,537	)
Payment of debt extinguishment costs		(402	)		—			—			—			(402	)
Excess tax benefit from stock-based compensation		49			—			—			—			49
Intercompany advances, net		2,919			44,310			(47,229	)		—			—

Net cash provided by (used in) financing activities		(5,823	)		44,310			(47,229	)		—			(8,742	)

Net change in cash and cash equivalents		(27,439	)		6,054			983			—			(20,402	)
Cash and cash equivalents at beginning of year		55,670			4,212			37,987			—			97,869

Cash and cash equivalents at end of year	$	28,231		$	10,266		$	38,970		$	—		$	77,467

PARKER DRILLING COMPANY AND SUBSIDIARIES

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	)		—			(12,063	)
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 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 on 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 compensation		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