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 utilization; -- 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 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) June 30, 2007 December 31, 2006 ASSETS (Dollars in Thousands) CURRENT ASSETS 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 OTHER ASSETS 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 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES 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 TOTAL LIABILITIES AND STOCKHOLDERS' 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 PARKER DRILLING COMPANY AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 (Dollars in Thousands) (Dollars in Thousands) DRILLING AND RENTAL REVENUES 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 TOTAL DRILLING AND RENTAL REVENUES 150,277 145,988 301,550 293,322 DRILLING AND RENTAL OPERATING EXPENSES 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 TOTAL DRILLING AND RENTAL OPERATING EXPENSES 107,396 106,352 209,162 212,621 DRILLING AND RENTAL 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 OTHER INCOME AND (EXPENSE) 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) TOTAL OTHER INCOME AND (EXPENSE) (4,231) (5,731) (10,151) (13,596) INCOME BEFORE INCOME TAXES 32,673 28,455 86,776 54,409 INCOME TAX EXPENSE 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 EARNINGS PER SHARE -- BASIC Net Income $0.16 $0.13 $0.44 $0.24 EARNINGS PER SHARE -- DILUTED Net Income $0.16 $0.13 $0.44 $0.24 AVERAGE COMMON SHARES OUTSTANDING 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 PARKER DRILLING COMPANY AND SUBSIDIARIES Selected Financial Data (Unaudited) 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 DRILLING AND RENTAL OPERATING EXPENSES 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 DRILLING AND RENTAL OPERATING INCOME 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 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 June March December September 30, 31, 31, 30, 2007 2007 2006 2006 Income from Continuing Operations $18,103 $29,994 $37,168 $18,639 Adjustments: 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 (Unaudited) 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 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 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 August 1, 2007