Parker Drilling Second Quarter 2007 Net Income Increases 32 Percent

HOUSTON, Aug. 1 /PRNewswire-FirstCall/ -- Parker Drilling Company (NYSE: PKD), a global drilling contractor and service provider, today reported strong financial and operating results for the second quarter 2007. Highlights include:

    -- Net Income increased 32 percent over the second quarter 2006;
    -- Earnings before interest, taxes, depreciation and amortization (EBITDA)
       increased 13 percent over the second quarter 2006;
    -- Deep drilling barge rigs experienced record dayrates and high
    -- International land rig utilization continued to increase;
    -- New convertible debt offering will reduce cash interest expense.

Second Quarter Earnings and Financial Highlights

For the three months ended June 30, 2007, Parker posted net income of $18.1 million, or $0.16 per diluted share, on revenues of $150.3 million, compared to net income of $13.8 million, or $0.13 per diluted share, on revenues of $146.0 million for the second quarter 2006. Included in net income is a non-cash charge to tax expense of $4.0 million, or $0.04 per diluted share, 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"). Net income in the second quarter 2006 included a $0.01 per diluted share gain on an insurance settlement and a favorable change in fair value of interest rate derivatives.

EBITDA was $56.3 million for the second quarter 2007, 13 percent higher than the $49.8 million in the second quarter 2006. Significantly higher dayrates resulted in a 44 percent EBITDA improvement for Parker's U.S. operations over the second quarter 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 six months of 2007, Parker Drilling reported revenues of $301.6 million and net income of $48.1 million or $0.44 per diluted share compared to revenues of $293.3 million and net income of $25.2 million or $0.24 per diluted share for the first six months of 2006. 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 and non-cash FIN 48 charges of $0.05 per diluted share compared to income from non-routine items of $0.02 per diluted share in 2006.

Capital expenditures for the six months ended June 30, 2007 totaled $129.6 million. Total debt remained unchanged at approximately $329 million, and the Company's cash, cash equivalents and marketable securities totaled $102.3 million at June 30, 2007.

Average utilization for barge rigs drilling in the Gulf of Mexico transition zone for the second quarter 2007 was 74 percent, slightly above the 71 percent reported for the second quarter 2006 and similar to the 73 percent reported for the first quarter 2007. Current barge rig utilization is 88 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico continued to experience record levels, averaging $51,600 per day during the second quarter 2007, up approximately 28 percent, or $11,200 per day, from the second quarter 2006. (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 second quarter 2007 increased to 71 percent, up from the 66 percent reported for the first quarter 2007 and the 65 percent in the second quarter 2006. Current international utilization is 78 percent and is expected to further increase during 2007 as rigs continue to reposition between contracts.

Quail Tools, Parker Drilling's drilling and production rental tools subsidiary, continued its solid performance as it recorded EBITDA of $18.9 million in the second quarter 2007, up $0.1 million from the first quarter 2007. The expansion of Quail is well underway as equipment is being delivered to Quail's new facility in Texarkana, Texas, which opened on April 2. The new facility provides increased coverage of the Barnett, Fayetteville and Woodford shale areas in East Texas, Arkansas and Oklahoma.


Robert L. Parker Jr., chairman and chief executive officer of Parker Drilling, said: "Parker Drilling's second quarter results are continued evidence that our disciplined approach is driving profitable growth. Our performance was driven by solid dayrates and sustained demand for our preferred barge rigs despite recent uncertainties in the U.S. gas market.

"In line with our strategic growth plan of providing our customers with preferred rigs, three barge rigs completed refurbishment programs during the quarter and re-entered our U.S. fleet in June, all under contract. Two of our four new 2,000 horsepower rigs have begun operations in Algeria, and the remaining two rigs are rigging up in Mexico for a three-year contract. Two new land rigs built in conjunction with our Saudi Arabian joint venture are also operating, with an additional four rigs expected to deploy in the country for the joint venture throughout 2007.

"Quail Tools was flat for the quarter as key deepwater projects have been delayed by our customers and new equipment relating to Quail's expansion has been delivered later than anticipated. We expect the second half of the year to be much improved as new equipment is placed into service and deep water projects begin.

"With the second quarter announcement of three multi-year contracts in Mexico and Turkmenistan, our global utilization now stands at 81 percent, a strong improvement over last year. Looking ahead, we continue to expect increased contributions from our international segments as more rigs come online, benefiting from our focus on securing long-term, high-margin work in regions with significant growth potential. We remain optimistic that our U.S. barge segment can continue to generate strong utilization and dayrates in the third and fourth quarters, and are confident in the growth of our rental tools segment.

"Additionally, in July we completed a public offering of $125 million aggregate principal amount of convertible senior notes due 2012 that will reduce our interest costs going forward by using the majority of the proceeds to pay down our more expensive debt. As a result, we will be saving approximately $7.4 million in cash interest expense annually, allowing us to reinvest more of our cash flow into growing our business and building high-performance, preferred equipment.

"We have significant momentum heading into the rest of 2007 and are committed to the execution of our strategic growth plan while anticipating the needs of our customers. I am excited about the opportunities ahead."

Parker has scheduled a conference call at 9:00 a.m. CDT (10:00 a.m. EDT) on Wednesday, Aug. 1, to discuss second quarter 2007 financial results. Those interested in participating in the call may dial in at (303) 262-2211. The conference call replay can be accessed from Aug. 1 through Aug. 8 by dialing (800) 405-2236 and using the access code 11093788#. Alternatively, the call can be accessed live through the company's website at 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.

                      Consolidated Condensed Balance Sheets

                                              June 30, 2007  December 31, 2006
                   ASSETS                           (Dollars in Thousands)
     Cash and Cash Equivalents                     $63,148           $92,203
     Marketable Securities                          39,200            62,920
     Accounts and Notes Receivable, Net            135,923           112,359
     Rig Materials and Supplies                     21,075            15,000
     Deferred Costs                                 10,143             6,662
     Deferred Income taxes                          17,307            17,307
     Other Current Assets                           22,469            11,123
      TOTAL CURRENT ASSETS                         309,265           317,574

    PROPERTY, PLANT AND EQUIPMENT, NET             525,872           435,473

     Goodwill                                      100,315           100,315
     Deferred Taxes                                 26,492            13,405
     Other Assets                                   28,624            34,534
      TOTAL OTHER ASSETS                           155,431           148,254

    TOTAL ASSETS                                  $990,568          $901,301

     Current Portion of Long-Term Debt                  $-                $-
     Accounts Payable and Accrued
      Liabilities                                   89,359           101,903
      TOTAL CURRENT LIABILITIES                     89,359           101,903

    LONG-TERM DEBT                                 329,044           329,368

    LONG-TERM DEFERRED TAXES                        25,541               -

    OTHER LIABILITIES                               73,964            10,931

    STOCKHOLDERS' EQUITY                           472,660           459,099

     EQUITY                                       $990,568          $901,301

    Current Ratio                                     3.46              3.12

    Total Long-Term Debt as a Percent of
     Capitalization                                    41%               42%

    Book Value Per Common Share                      $4.19             $4.17

                 Consolidated Condensed Statements of Operations

                               Three Months Ended         Six  Months Ended
                                     June 30,                  June 30,
                                2007         2006         2007         2006
                              (Dollars in Thousands)    (Dollars in Thousands)
      U.S. Drilling            $57,651      $42,697     $119,275      $82,950
      International Drilling    61,196       72,972      120,870      152,802
      Rental Tools              31,430       30,319       61,405       57,570
     RENTAL REVENUES           150,277      145,988      301,550      293,322

      U.S. Drilling             24,616       19,814       51,377       37,284
      International Drilling    50,617       57,854       96,400      119,226
      Rental Tools              12,521       10,969       23,684       21,439
      Depreciation and
       Amortization             19,642       17,715       37,701       34,672
     EXPENSES                  107,396      106,352      209,162      212,621

     OPERATING INCOME           42,881       39,636       92,388       80,701

    General and Administrative
     Expense                    (6,246)      (7,575)     (12,134)     (15,269)
    Gain on Disposition of
     Assets, Net                   269        2,125       16,673        2,573

    TOTAL OPERATING INCOME      36,904       34,186       96,927       68,005

      Interest Expense          (5,985)      (8,199)     (12,315)     (17,300)
      Change in Fair Value
       of Derivative Position      (28)         382         (409)       1,195
      Interest Income            1,712        2,039        3,496        3,445
      Other Income (Expense)
       -- Net                       70           47         (923)        (936)
     (EXPENSE)                  (4,231)      (5,731)     (10,151)     (13,596)

    INCOME BEFORE INCOME TAXES  32,673       28,455       86,776       54,409

      Current Tax Expense        5,370       (5,563)      27,382            -
      Deferred Tax Expense       9,200       20,257       11,297       29,190
    TOTAL INCOME TAX EXPENSE    14,570       14,694       38,679       29,190

    NET INCOME                 $18,103      $13,761      $48,097      $25,219

      Net Income                 $0.16        $0.13        $0.44        $0.24

      Net Income                 $0.16        $0.13        $0.44        $0.24

      Basic                109,740,528  107,082,784  108,760,980  105,783,424
      Diluted              110,842,121  108,363,036  109,968,329  107,283,318

                             Selected Financial Data

                                                     Three Months Ended
                                                   June 30,         March 31,
                                               2007       2006        2007
    DRILLING AND RENTAL REVENUES                  (Dollars in Thousands)
      U.S. Offshore Drilling                 $54,316     $42,697     $55,152
      U.S. Land Drilling                       3,335           -       6,472
      International Land Drilling             52,268      59,028      51,875
      International Offshore Drilling          8,928      13,944       7,799
      Rental Tools                            31,430      30,319      29,975
        Total Drilling and Rental Revenues   150,277     145,988     151,273

      U.S. Offshore Drilling                  21,551      19,814      22,136
      U.S. Land Drilling                       3,065           -       4,625
      International Land Drilling             45,019      46,350      40,694
      International Offshore Drilling          5,598      11,504       5,089
      Rental Tools                            12,521      10,969      11,163
        Drilling and Rental Operating
         Expenses                             87,754      88,637      83,707

      U.S. Offshore Drilling                  32,765      22,883      33,016
      U.S. Land Drilling                         270           -       1,847
      International Land Drilling              7,249      12,678      11,181
      International Offshore Drilling          3,330       2,440       2,710
      Rental Tools                            18,909      19,350      18,812
      Depreciation and Amortization          (19,642)    (17,715)    (18,059)
        Total Drilling and Rental
         Operating Income                     42,881      39,636      49,507

      General and Administrative Expense      (6,246)     (7,575)     (5,888)

      Gain on Disposition of Assets, Net         269       2,125      16,404

    TOTAL OPERATING INCOME                   $36,904     $34,186     $60,023

                         Marketable Rig Count Summary
                             As of June 30, 2007


      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

                                                  Three Months Ending
                                            June    March  December  September
                                             30,      31,      31,      30,
                                            2007     2007     2006     2006

    Income from Continuing Operations      $18,103  $29,994  $37,168  $18,639
        Income Tax Expense                  14,570   24,109   (5,954)  13,173
        Total Other (Income) and Expense     4,231    5,920    3,554    8,741
        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                                   -        -        -        -

    Adjusted EBITDA                        $56,277  $61,678  $51,701  $53,218

                               Adjusted EBITDA

                                             Three Months Ending
                                   June     March  December  September  June
                                    30,      31,      31,       30,      30,
                                   2006     2006     2005      2005     2005

    Income from Continuing
     Operations                  $13,761  $11,458  $56,707   $18,073  $20,194
        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
        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