Press Releases
Parker Drilling Reports Company-Record Results for 2007
EBITDA Up 28% on 12% Revenue Growth
HOUSTON, Feb. 26 /PRNewswire-FirstCall/ -- Parker Drilling Company (NYSE: PKD), a global drilling contractor and service provider, today reported strong financial and operating results for the three and twelve months ended December 31, 2007. Highlights for 2007 include:
-- Record company revenues of $654.6 million, a 12 percent increase over
the prior year;
-- Record earnings before interest, taxes, depreciation and amortization
(EBITDA) of $261.8 million, a 28 percent increase over the prior year;
-- Record net income of $104.1 million, a 28 percent increase over the
prior year;
-- Record EBITDA for U.S. barge rig operations of $128.7 million, a
23 percent increase over 2006;
-- Record EBITDA for Quail Tools of $83.7 million for the year, an
11 percent increase over 2006, and record quarterly EBITDA of
$25.0 million;
-- Fourth quarter 2007 international land rig utilization of 83 percent,
nearly double the 46 percent in the fourth quarter last year; and
-- A company-best safety mark of 0.81 Total Recordable Incident Rate
(TRIR) for 2007, below last year's record 0.86 TRIR. TRIR is a
workplace safety indicator standard used in the drilling industry.
Robert L. Parker Jr., chairman and chief executive officer of Parker Drilling, said: "Parker delivered another solid quarter and outstanding results for the year 2007, our fifth consecutive year of rising revenues, net income and EBITDA, driven by strong performances across our diverse businesses of contract drilling, project management and rental tool services. Our ability to anticipate the geographic and technological needs of our customers continues to be a key contributing factor in our success, and will be the principal driver of our long-term strategies."
For the year ended December 31, 2007, Parker reported revenues of $654.6 million and net income of $104.1 million or $0.94 per diluted share. This compares to revenues of $586.4 million and net income of $81.0 million or $0.75 per diluted share for the year ended December 31, 2006. Non-routine items in 2007 resulted in a net benefit of $9.1 million or $0.08 per diluted share and included after-tax gain of $0.07 per diluted share from the sale of two workover barge rigs in January, a non-cash FIN 48 tax benefit of $0.18 per diluted share related to the Kazakhstan tax payment in December, a $0.16 per diluted share reserve relating to the joint venture operations in Saudi Arabia and after-tax charges of $0.01 per diluted share for debt extinguishment and other items. Net income for 2006 included income from non-routine items of $0.14 per diluted share. The details of the non-routine items for the year and the quarter 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".
For the year ended December 31, 2007 total EBITDA was $261.8 million, a 28 percent increase over the $205.0 million reported for 2006. The details of the EBITDA calculation, a non-GAAP financial measure, for the current and prior periods are defined and reconciled later in this press release to their most directly comparable GAAP financial measure.
Capital expenditures for the year ended December 31, 2007 totaled $242.1 million. The Company's cash and cash equivalents totaled $60.1 million and total debt was $373.7 million at December 31, 2007.
Fourth Quarter Earnings and Financial Review
For the three months ended December 31, 2007, Parker reported earnings of $34.6 million, or $0.31 per diluted share, on revenues of $180.8 million. This compares to revenues of $146.3 million and net income of $37.2 million or $0.34 per diluted share for the fourth quarter of 2006. Net income in the fourth quarter 2007 included a loss of $8.4 million or $0.07 per diluted share related to the financial results from operations of the Saudi Arabia joint venture. It also included net non-routine income of $0.08 per diluted share or $8.6 million, consisting of a $17.6 million reserve relating to the joint venture operations in Saudi Arabia and a $25.6 million FIN 48 tax benefit. Net income in the fourth quarter of 2006 included net non-routine income of $0.12 per diluted share or $12.8 million, of which $12.6 million was non-cash deferred taxes.
EBITDA was $69.7 million for the fourth quarter of 2007, 35 percent higher than the $51.7 million reported in the fourth quarter of 2006. Higher utilization and dayrates resulted in a 91 percent EBITDA improvement for international operations. Quail Tools, Parker's drilling and production rental tools subsidiary, achieved record EBITDA of $25.0 million, which exceeded the record set in the third quarter of 2007 by 20 percent. Average utilization for barge rigs drilling in the Gulf of Mexico transition zone for the fourth quarter 2007 of 83 percent remained unchanged from the third quarter 2007 and was a substantial increase from the 68 percent reported for the fourth quarter 2006. Current barge rig utilization is 75 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico averaged $43,900 per day for the fourth quarter 2007, down nine percent from the third quarter. (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 fourth quarter 2007 increased to 83 percent, up from the 75 percent reported for the third quarter 2007 and nearly doubling the 46 percent in the fourth quarter 2006. Current international utilization is 79 percent.
As previously disclosed in our periodic filings, the joint venture operations in Saudi Arabia have experienced delays and unanticipated costs. Due to these issues, contractual deadlines regarding the commencement of drilling operations for the rigs have not been met. In addition, the joint venture has incurred and continues to incur significant capital costs and equipment rental fees to expedite commissioning and continued operation of the rigs and is in discussions with its customer, Saudi Aramco, to resolve the timing and cost issues associated with the project.
Kazakhstan Tax Update
Parker's Kazakhstan subsidiary received notice yesterday of a decision from the Atyrau Economic Court canceling the previous assessment of approximately $33 million of interest dating back to 2000 and requiring a recalculation of the interest assessment from October 12, 2005, through December 12, 2007, the date the principal amount of the tax was paid. Although the subsidiary believes that there is factual and legal support for this decision, it is anticipated that the Ministry of Finance will appeal this decision.
Summary
Parker continued, "We continue to realize the substantial benefits of repositioning our international land fleet to long-term contracts with strong margins in markets with long-term visibility for growth. Demand in international land markets is solid, and we expect continued strength from this business, considering the fourth quarter announcement of new contracts in Mexico and Kazakhstan.
"Quail Tools continued its outstanding performance, as fourth quarter EBITDA significantly exceeded third quarter's record results. Quail is reaping substantial benefits from the increasing deepwater activity in the Gulf of Mexico, and is also seeing an upswing in contributions from its Williston Basin and Barnett Shale markets. We continue to remain confident in the strength of this segment.
"Our U.S. barge rig segment completed the fourth quarter of 2007 with strong results. In the near term, we expect our U.S. barge segment to remain active. Deep barge dayrates have leveled off and 90 percent of the deep barge fleet is committed through the first quarter. We expect our intermediate barge rig segment to experience some weakness in the first half of 2008.
As we enter 2008, we will continue to lead the industry in innovation with our new rig designs, will push our operational performance to new heights in efficiency and safety, and will grow in accordance with our disciplined strategic plan. This constant evolution of our high-performance drilling solutions is the hallmark of Parker Drilling's ability to anticipate the needs of our customers around the world. I am confident that this level of performance will result in strong returns across our operating segments."
Parker Drilling has scheduled a conference call at 9 a.m. CST (10 a.m. EST) on Tuesday, Feb. 26, 2008 to discuss fourth quarter and year-end 2007 results. Those interested in participating in the call may dial in at 303-262-2075. The conference call replay can be accessed from Feb. 26 through March 4 by dialing (800) 405-2236 and using the access code 11107527#. Alternatively, the call can be accessed live through the investor relations section of 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 Balance Sheets
(Unaudited)
December 31, December 31,
2007 2006
ASSETS (Dollars in Thousands)
CURRENT ASSETS
Cash and Cash Equivalents $60,124 $92,203
Marketable Securities - 62,920
Accounts and Notes Receivable, Net 166,706 112,359
Rig Materials and Supplies 24,264 15,000
Deferred Costs 7,795 6,662
Deferred Income Taxes 9,423 17,307
Other Current Assets 54,871 11,123
TOTAL CURRENT ASSETS 323,183 317,574
PROPERTY, PLANT AND EQUIPMENT, NET 585,888 435,473
OTHER ASSETS
Goodwill 100,315 100,315
Deferred Taxes 40,121 13,405
Other Assets 19,663 34,534
TOTAL OTHER ASSETS 160,099 148,254
TOTAL ASSETS $1,069,170 $901,301
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Debt $20,000 $ -
Accounts Payable and Accrued Liabilities 104,180 101,903
TOTAL CURRENT LIABILITIES 124,180 101,903
LONG-TERM DEBT 353,721 329,368
LONG-TERM DEFERRED TAXES 227 -
OTHER LIABILITIES 56,318 10,931
STOCKHOLDERS' EQUITY 534,724 459,099
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,069,170 $901,301
Current Ratio 2.60 3.12
Total Debt as a Percent of Capitalization 41% 42%
Book Value Per Common Share $4.78 $4.21
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
(Dollars in Thousands) (Dollars in Thousands)
DRILLING AND RENTAL REVENUES
U.S. Drilling $52,164 $55,928 $231,139 $191,225
International Drilling 87,536 58,809 285,403 273,216
Rental Tools 41,126 31,593 138,031 121,994
TOTAL DRILLING AND RENTAL
REVENUES 180,826 146,330 654,573 586,435
DRILLING AND RENTAL OPERATING
EXPENSES
U.S. Drilling 21,453 25,234 98,393 83,462
International Drilling 67,261 48,204 215,279 219,710
Rental Tools 16,114 12,666 54,377 46,454
Depreciation and
Amortization 25,059 17,605 85,803 69,270
TOTAL DRILLING AND RENTAL
OPERATING EXPENSES 129,887 103,709 453,852 418,896
DRILLING AND RENTAL OPERATING
INCOME 50,939 42,621 200,721 167,539
General and Administrative
Expense (6,328) (8,525) (24,708) (31,786)
Provision for Reduction in
Carrying Value of Certain
Assets (371) - (1,462) -
Gain on Disposition of
Assets, Net (784) 672 16,432 7,573
TOTAL OPERATING INCOME 43,456 34,768 190,983 143,326
OTHER INCOME AND (EXPENSE)
Interest Expense (5,266) (6,375) (25,157) (31,598)
Change in Fair Value of
Derivative Position - (126) (671) 40
Interest Income 902 1,997 6,478 7,963
Loss on Extinguishment of Debt - - (2,396) (1,912)
Equity in Loss of
Unconsolidated Joint
Venture, Net of Taxes (25,978) - (27,101) -
Other Income (Expense) - Net 78 950 (335) (384)
TOTAL OTHER INCOME AND
(EXPENSE) (30,264) (3,554) (49,182) (25,891)
INCOME BEFORE INCOME TAXES 13,192 31,214 141,801 117,435
INCOME TAX EXPENSE (BENEFIT)
Current Tax Expense
(Benefit) (25,621) 9,962 17,602 20,654
Deferred Tax Expense
(Benefit) 4,242 (15,916) 20,121 15,755
TOTAL INCOME TAX EXPENSE
(BENEFIT) (21,379) (5,954) 37,723 36,409
NET INCOME $34,571 $37,168 $104,078 $81,026
EARNINGS PER SHARE - BASIC
Net Income $0.31 $0.35 $0.95 $0.76
EARNINGS PER SHARE - DILUTED
Net Income $0.31 $0.34 $0.94 $0.75
AVERAGE COMMON SHARES
OUTSTANDING
Basic 110,350,218 107,379,371 109,542,364 106,552,015
Diluted 111,392,786 108,751,555 110,856,694 108,138,384
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
Three Months Ended
December 31, September 30,
2007 2006 2007
DRILLING AND RENTAL REVENUES (Dollars in Thousands)
U.S. Offshore Drilling $52,164 $51,128 $58,197
U.S. Land Drilling - 4,800 1,503
International Land Drilling 79,393 49,146 66,976
International Offshore Drilling 8,143 9,663 10,021
Rental Tools 41,126 31,593 35,500
Total Drilling and Rental Revenues 180,826 146,330 172,197
DRILLING AND RENTAL OPERATING EXPENSES
U.S. Offshore Drilling 21,453 22,491 24,457
U.S. Land Drilling - 2,743 1,106
International Land Drilling 61,819 40,508 44,966
International Offshore Drilling 5,442 7,696 6,652
Rental Tools 16,114 12,666 14,579
Total Drilling and Rental
Operating Expenses 104,828 86,104 91,760
DRILLING AND RENTAL OPERATING INCOME
U.S. Offshore Drilling 30,711 28,637 33,740
U.S. Land Drilling - 2,057 397
International Land Drilling 17,574 8,638 22,010
International Offshore Drilling 2,701 1,967 3,369
Rental Tools 25,012 18,927 20,921
Depreciation and Amortization (25,059) (17,605) (23,043)
Total Drilling and Rental
Operating Income 50,939 42,621 57,394
General and Administrative Expense (6,328) (8,525) (6,246)
Provision for Reduction in Carrying
Value of Certain Assets (371) - (1,091)
Gain on Disposition of Assets, Net (784) 672 543
TOTAL OPERATING INCOME $43,456 $34,768 $50,600
Marketable Rig Count Summary
As of December 31, 2007
Total
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 8
CIS 8
Total International Land Rigs 28
International Barge Rigs
Mexico 1
Caspian Sea 1
Total International Barge Rigs 2
Total Marketable Rigs 46
Adjusted EBITDA
(Unaudited)
Three Months Ending
December September June March December September
31, 30, 30, 31, 31, 30,
2007 2007 2007 2007 2006 2006
Income from
Continuing
Operations $34,571 $22,653 $16,860 $29,994 $37,168 $18,639
Adjustments:
Income Tax
Expense (Benefit) (21,379) 19,180 15,813 24,109 (5,954) 13,173
Total Other Income
and Expense 30,264 8,767 4,231 5,920 3,554 8,741
Loss/(Gain) on
Disposition of
Assets, Net 784 (543) (269) (16,404) (672) (4,328)
Depreciation and
Amortization 25,059 23,043 19,642 18,059 17,605 16,993
Provision for
Reduction in
Carrying Value 371 1,091 - - - -
Adjusted EBITDA $69,670 $74,191 $56,277 $61,678 $51,701 $53,218
Three Months Ending
June March December September June
30, 31, 31, 30, 30,
2006 2006 2005 2005 2005
Income (Loss) from
Continuing
Operations $13,761 $11,458 $56,707 $18,073 $20,194
Adjustments:
Income Tax
Expense 14,694 14,496 (39,087) 2,165 3,486
Total Other Income
and Expense 5,731 7,865 10,251 9,627 15,140
Loss/(Gain) on
Disposition of
Assets, Net (2,125) (448) (3,185) (5,943) (15,898)
Depreciation and
Amortization 17,715 16,957 16,619 16,563 17,146
Provision for
Reduction in
Carrying Value - - 2,584 2,300 -
Adjusted EBITDA $49,776 $50,328 $43,889 $42,785 $40,068
SOURCE Parker Drilling Company
Released February 26, 2008