Press Releases
Parker Drilling Reports 2009 Second Quarter Results
HOUSTON, July 31 /PRNewswire-FirstCall/ -- Parker Drilling Company (NYSE: PKD), a global drilling contractor and service provider, today reported financial and operating results for the 2009 second quarter, including net income of $4.4 million or $0.04 per diluted share on revenues of $221.8 million. Excluding non-routine items the Company reported net income of $7.0 million or $0.06 per diluted share.
Second Quarter Highlights:
-- Revenues of $221.8 million exceeded the prior year's second quarter
revenues of $216.7 million by 2 percent. The Company reported a
significant increase in Construction Contract revenues, and a modest
increase in revenues for the International Drilling segment, while
revenues for each of the other segments declined, reflecting prevailing
market conditions;
-- Gross margin as a percent of revenues increased significantly for both
International Drilling and Project Management and Engineering Services
when compared to the prior year and the preceding quarter;
-- Initiation of the sea-lift of the BP-owned "Liberty" rig to
its operating site in Alaska's Beaufort Sea. In addition, the
construction of the two Parker-owned arctic Alaska rigs continues on
schedule for their 2010 deployment to the North Slope to begin drilling
on two five-year contracts for BP;
-- A better-than-breakeven gross margin from the U.S. barge drilling
operation, a significant improvement from first quarter results and
in-line with the operating objectives for this business;
-- An average utilization rate of 68 percent for the international rig
fleet and 30 percent for the U.S. barge rig fleet; and
-- A June year-to-date Company safety performance of 0.49 Total Recordable
Incident Rate (TRIR), better than Parker's 2008 industry-leading
TRIR of 0.66.
"Despite pressures worldwide on contractors and service providers to the energy exploration and development markets, Parker Drilling delivered reasonable results for the quarter," said Robert L. Parker Jr., chairman and chief executive officer. "Our international drilling and project management operations increased their profitability, measured by gross margin and gross margin as a percent of revenues, while slowing demand and increased discounting in the U.S. drilling market put pressure on the gross margin for our rental tools. The Gulf of Mexico barge drilling business returned to a positive gross margin in the quarter, benefiting from a reduced cost structure and stabilizing demand.
"The accumulating weight of global economic conditions and the slowdown in exploration have led us to pare back our expectations of near-term revenue trends for the Company. The actions we have implemented to reduce our cost structure while improving service to our customers and leveraging our technical and safety leadership should allow us to sustain profitable operations, though I expect Parker's net income and earnings per share to decline from current levels and remain low for the remainder of the year," Mr. Parker concluded.
Financial Review
For the three months ended June 30, 2009, Parker Drilling posted net income of $4.4 million, or $0.04 per diluted share, on revenues of $221.8 million, compared to net income of $21.9 million, or $0.19 per diluted share, on revenues of $216.7 million for the 2008 second quarter. Excluding the impact of non-routine items, adjusted net income for the 2009 second quarter was $7.0 million or $0.06 per diluted share, compared with 2008 second quarter adjusted net income of $23.6 million or $0.21 per diluted share. (The results for 2008 have been restated for the impact of the recently adopted FASB Staff Position APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)"). The 2009 second quarter included non-routine net after-tax expense of $2.6 million, or $0.02 per diluted share, related to the previously disclosed investigations by the Department of Justice and the Securities and Exchange Commission regarding the Company's utilization of the services of a customs agent in certain countries and an internal investigation regarding U.S. economic sanctions related primarily to the Company's operations in Turkmenistan. The results for the 2008 second quarter included net after-tax expense of $1.7 million, or $0.02 per diluted share, for non-routine items. (Details of the non-routine items are provided in the attached financial tables.)
U.S. Barge Drilling revenues declined 74 percent to $12.9 million from $49.4 million, due to lower utilization and reduced dayrates for the Gulf of Mexico barge drilling fleet. International Drilling revenues increased 2 percent, to $79.3 million from $77.9 million, due to higher dayrates in the CIS/AME region which more than offset the effects of the decline in the segment's average utilization rate. Rental Tools revenues decreased 30 percent to $28.2 million from $40.4 million, with the impact of the recent decline in U.S. land and Gulf of Mexico shelf drilling somewhat offset by increased coverage in the active shale regions and an increase in demand for workover equipment. Revenues for Project Management and Engineering Services declined 18 percent to $23.9 million from $29.0 million, primarily as a result of a lower amount of reimbursables in revenues. Construction Contract segment revenues of $77.6 million, a significant increase from the prior year's second quarter, reflect the quarter's progress on the construction contract for the BP-owned "Liberty" ultra-extended-reach rig.
Adjusted EBITDA, after non-routine items, for the second quarter 2009 was $49.2 million compared to $72.6 million in the second quarter 2008. (Adjusted EBITDA is a non-GAAP financial measure. The calculations of adjusted EBITDA and reconciliation to the most directly comparable GAAP measure are provided in the attached tables). Increases in gross margin for the International Drilling and Project Management and Engineering Services segments were more than offset by year-to-year declines in U.S. Barge Drilling and Rental Tools. International Drilling's gross margin increased 43 percent to $30.4 million from the prior year's second quarter gross margin of $21.3 million. As a result, gross margin as a percent of revenues was 38.3 percent in the 2009 second quarter compared to 27.3 percent in the prior year's second quarter and 35.7 percent in the 2009 first quarter. The increase compared to the prior year's second quarter was primarily the result of a significant rise in the dayrate for Rig 257, Parker's Caspian Sea barge rig, and lower operating costs throughout the segment.
Project Management and Engineering Services' gross margin increased 32 percent to $5.6 million from $4.2 million for the prior year's second quarter. Gross margin as a percent of revenues was 23.5 percent for the 2009 second quarter compared to 14.7 percent in the prior year's second quarter and 19.2 percent in the 2009 first quarter. Much of this improvement is due to a reduction in the proportion of lower margin revenues generated by reimbursable expenses. U.S. Barge Drilling reported a gross margin of $1.3 million, a turnaround from the segment's gross margin loss in the first quarter, as a result of cost management actions and fleet deployment initiatives.
For the first six months of 2009, Parker reported a 1 percent increase in revenues, to $395.7 million from $390.0 million for the same period in the prior year. Adjusted EBITDA, after non-routine items, declined by 30 percent, to $94.2 million from $134.0 million for the comparable period. Earnings per diluted share, excluding non-routine items, was $0.11, down from $0.37 for the same period of 2008.
Operations Review
-- Average utilization for the Company's Gulf of Mexico barge rigs for
the second quarter 2009 was 30 percent, compared to 91 percent in the
prior year's second quarter and 25 percent in the 2009 first
quarter. Currently, barge rig utilization is 33 percent. The
Company's barge dayrates in the Gulf of Mexico averaged $29,800 per
day during the 2009 second quarter, compared to $38,700 per day in the
2008 second quarter and $28,000 per day in the 2009 first quarter.
(Average dayrates for each classification of barge by quarter are
available in the "Dayrates - GOM" schedule posted on
Parker's website under "Investor Relations" at
"Quarterly Support Materials".)
-- Average utilization of international rigs, both land and barge rigs, for
the 2009 second quarter was 68 percent, compared to 76 percent reported
for the prior year's second quarter and 79 percent reported for the
2009 first quarter. (Average utilization for Parker's rig fleet by
quarter is available in the "Rig Utilization Schedule" posted
on Parker's website under "Investor Relations" at
"Quarterly Support Materials".)
-- The Company's Americas region operated at 82 percent average
utilization, with nine of ten rigs working during the quarter. Two
of the working rigs completed their contracted work during the
quarter, one in April and another in June. As a result of recently
signed contracts, six of the ten rigs in this region have
commitments to work into 2010.
-- Parker's twelve rigs located in the Commonwealth of Independent
States / Africa Middle East (CIS / AME) region achieved average
utilization of 79 percent during the quarter. Ten rigs worked
during the quarter, with three rigs completing their work before
quarter-end. Eight of the twelve rigs in the CIS / AME region are
operating under contracts that extend beyond 2009.
-- The eight-rig Parker fleet located in the Asia Pacific region
operated at 41 percent average utilization during the quarter, with
five of the eight rigs having worked during the quarter. Two of the
working rigs completed their contracted work during the quarter, one
in April and another in May. While most contracts in this region are
for short duration projects, three rigs are committed to programs
that extend into 2010.
-- Rental tool demand slowed, primarily driven by the decline in U.S.
drilling activity. Quail Tools' solid customer base and presence
in the more active shale regions has provided some support to revenues
and earnings.
-- In Project Management and Engineering Services, the "Yastreb"
rig operated by Parker Drilling for the Sakhalin-1 consortium, was
successfully moved to its new location, 100 kilometers north of its
previous site, and spud in April on a drilling program to evaluate the
Odoptu field.
Capital expenditures for the three months ended June 30, 2009 totaled $42.6 million, including $13.7 million for the construction of Parker's two newbuild land rigs for Alaska, and $8.2 million for tubular goods and other rental equipment.
At the end of the period total debt was $427.6 million and the Company's total debt-to-capitalization ratio was 42.0 percent. Adjusted for the Company's cash and cash equivalents balance of $94.6 million, Parker's ratio of net-debt-to-net capitalization was 36.0 percent, compared to 31.6 percent at the end of 2008. The Company's $50 million term loan begins to amortize on September 30, 2009 at $3.0 million per quarter, while the remaining components of the Company's debt do not mature until 2012 and 2013.
Conference Call
Parker Drilling has scheduled a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on Friday, July 31, 2009 to discuss second quarter 2009 results. Those interested in listening to the call by telephone may do so by dialing (480) 629-9692. Alternatively, the call can be accessed through the Investor Relations section of the Company's Web site at http://www.parkerdrilling.com. A replay of the call will be available by telephone from July 31 through August 8 by dialing (303) 590-3030 and using the access code 4112027#, and for 12 months on the Company's Web site.
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, 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 Balance Sheets
June 30, 2009 December 31, 2008
------------- -----------------
(Unaudited)
ASSETS (Dollars in Thousands)
CURRENT ASSETS
Cash and Cash Equivalents $94,583 $172,298
Accounts and Notes Receivable, Net 189,228 186,164
Rig Materials and Supplies 28,551 30,241
Deferred Costs 6,472 7,804
Deferred Income Taxes 9,735 9,735
Other Current Assets 71,534 67,049
------ ------
TOTAL CURRENT ASSETS 400,103 473,291
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 710,843 675,548
OTHER ASSETS
Deferred Income Taxes 27,991 22,956
Other Assets 33,765 33,925
------ ------
TOTAL OTHER ASSETS 61,756 56,881
------ ------
TOTAL ASSETS $1,172,702 $1,205,720
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt $12,000 $6,000
Accounts Payable and Accrued
Liabilities 126,720 152,528
------- -------
TOTAL CURRENT LIABILITIES 138,720 158,528
------- -------
LONG-TERM DEBT 415,558 435,394
LONG-TERM DEFERRED TAX LIABILITY 8,192 8,230
OTHER LONG-TERM LIABILITIES 18,853 21,396
STOCKHOLDERS' EQUITY 591,379 582,172
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,172,702 $1,205,720
========== ==========
Current Ratio 2.88 2.99
Total Debt as a Percent of
Capitalization 42% 43%
Book Value Per Common Share $5.09 $5.13
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in Thousands) (Dollars in Thousands)
REVENUES:
U.S. Drilling $12,889 $49,368 $22,745 $95,256
International
Drilling 79,279 77,919 156,660 146,659
Project Management
and Engineering
Services 23,891 28,951 55,945 48,130
Construction
Contract 77,572 20,080 94,317 20,080
Rental Tools 28,160 40,412 66,049 79,883
------ ------ ------ ------
TOTAL REVENUES 221,791 216,730 395,716 390,008
------- ------- ------- -------
OPERATING
EXPENSES:
U.S. Drilling 11,628 22,130 24,764 43,652
International
Drilling 48,887 56,612 98,664 109,233
Project Management
and Engineering
Services 18,283 24,707 44,177 40,368
Construction
Contract 74,000 19,050 89,914 19,050
Rental Tools 12,752 16,030 29,206 31,848
Depreciation and
Amortization 28,951 28,166 56,075 54,332
------ ------ ------ ------
TOTAL OPERATING
EXPENSES 194,501 166,695 342,800 298,483
------- ------- ------- -------
TOTAL OPERATING
GROSS MARGIN 27,290 50,035 52,916 91,525
------ ------ ------ ------
General and
Administrative
Expense (11,126) (8,481) (24,186) (15,149)
Gain on
Disposition of
Assets, Net 704 636 782 1,215
--- --- --- -----
TOTAL OPERATING
INCOME 16,868 42,190 29,512 77,591
------ ------ ------ ------
OTHER INCOME AND
(EXPENSE):
Interest Expense (7,504) (7,045) (15,570) (13,882)
Interest Income 174 370 460 738
Equity in Loss of
Unconsolidated
Joint Venture and
Related Charges,
net of tax - - - (1,105)
Other Income (68) 144 (80) 204
--- --- --- ---
TOTAL OTHER INCOME
AND (EXPENSE) (7,398) (6,531) (15,190) (14,045)
------ ------ ------- -------
INCOME BEFORE
INCOME TAXES 9,470 35,659 14,322 63,546
----- ------ ------ ------
INCOME TAX EXPENSE
(BENEFIT)
Current 6,161 9,488 12,899 (1,155)
Deferred (1,082) 4,274 (5,074) 19,602
------ ----- ------ ------
TOTAL INCOME TAX
EXPENSE (BENEFIT) 5,079 13,762 7,825 18,447
----- ------ ----- ------
NET INCOME $4,391 $21,897 $6,497 $45,099
====== ======= ====== =======
EARNINGS PER
SHARE - BASIC
Net Income (Loss) $0.04 $0.20 $0.06 $0.41
EARNINGS PER SHARE
- DILUTED
Net Income (Loss) $0.04 $0.19 $0.06 $0.40
NUMBER OF COMMON
SHARES USED IN
COMPUTING
EARNINGS PER
SHARE
Basic 113,180,858 111,422,969 112,723,230 110,984,640
Diluted 114,757,123 112,495,655 114,107,675 112,023,524
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
Three Months Ended
------------------
June 30, March 31,
-------- ---------
2009 2008 2009
---- ---- ----
(Dollars in Thousands)
REVENUES:
U.S. Drilling $12,889 $49,368 $9,856
International Drilling 79,279 77,919 77,381
Project Management and
Engineering Services 23,891 28,951 32,054
Construction Contract 77,572 20,080 16,745
Rental Tools 28,160 40,412 37,889
------ ------ ------
Total Revenues 221,791 216,730 173,925
------- ------- -------
OPERATING EXPENSES:
U.S. Drilling 11,628 22,130 13,136
International Drilling 48,887 56,612 49,777
Project Management and
Engineering Services 18,283 24,707 25,894
Construction Contract 74,000 19,050 15,914
Rental Tools 12,752 16,030 16,454
------ ------ ------
Total Operating Expenses 165,550 138,529 121,175
------- ------- -------
OPERATING GROSS MARGIN:
U.S. Drilling 1,261 27,238 (3,280)
International Drilling 30,392 21,307 27,604
Project Management and
Engineering Services 5,608 4,244 6,160
Construction Contract 3,572 1,030 831
Rental Tools 15,408 24,382 21,435
Depreciation and
Amortization (28,951) (28,166) (27,124)
------- ------- -------
Total Operating Gross Margin 27,290 50,035 25,626
General and Administrative Expense (11,126) (8,481) (13,060)
Impairment of Goodwill - - -
Gain on Disposition of Assets, Net 704 636 78
------- ------- -------
TOTAL OPERATING INCOME (LOSS) $16,868 $42,190 $12,644
======= ======= =======
Marketable Rig Count Summary
As of June 30, 2009
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 and Barge Rigs
Asia Pacific 8
Americas 10
CIS/AME 12
Other 1
---
Total International Land and Barge Rigs 31
---
Total Marketable Rigs 46
===
Adjusted EBITDA
(Unaudited)
(Dollars in Thousands)
Three Months Ended
-------------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
------- --------- ------------ ------------- --------
Previously
Reported
Net Income
(Loss) $4,391 $2,106 $(39,477) $18,551 $22,596
Restated Interest
Expense,
Net of Tax -
Per APB 14-1 - - (724) (721) (699)
--- --- ---- ---- ----
Restated
Net Income
(Loss) 4,391 2,106 (40,201) 17,830 21,897
Adjustments:
Income Tax
(Benefit)
Expense 5,079 2,746 (31,178) 19,673 13,762
Total Other
Income and
Expense 7,398 7,792 9,121 6,344 6,531
Loss/(Gain) on
Disposition of
Assets, Net (704) (78) (683) (799) (636)
Impairment
of Goodwill - - 100,315
Depreciation
and
Amortization 28,951 27,124 31,961 30,663 28,166
Provision for
Reduction in
Carrying
Value of
Certain
Assets - - - - -
--- --- --- --- ---
Adjusted EBITDA $45,115 $39,690 $69,335 $73,711 $69,720
======= ======= ======= ======= =======
Adjustments:
Non-routine
items 4,048 5,308 6,279 2,264 2,885
----- ----- ----- ----- -----
Adjusted EBITDA
after non-routine
items $49,163 $44,998 $75,614 $75,975 $72,605
======= ======= ======= ======= =======
March 31, December 31, September 30, June 30,
2008 2007 2007 2007
--------- ------------ ------------- --------
Previously Reported
Net Income (Loss) $23,888 $34,571 $22,653 $16,860
Restated
Interest
Expense,
Net of Tax -
Per APB 14-1 (686) (670) (562) -
---- ---- ---- ---
Restated N
et Income
(Loss) 23,202 33,901 22,091 16,860
Adjustments:
Income Tax
(Benefit)
Expense 4,685 (21,830) 18,803 15,813
Total Other
Income and
Expense 7,514 31,385 9,706 4,231
Loss/(Gain) on
Disposition of
Assets, Net (579) 784 (543) (269)
Impairment of
Goodwill
Depreciation and
Amortization 26,166 25,059 23,043 19,642
Provision for
Reduction in
Carrying
Value of
Certain Assets - 371 1,091 -
--- --- ----- ---
Adjusted EBITDA $60,988 $69,670 $74,191 $56,277
======= ======= ======= =======
Adjustments:
Non-routine items 441 - - -
------ ------ ------ ------
Adjusted EBITDA
after non-routine
items $61,429 $69,670 $74,191 $56,277
======= ======= ======= =======
PARKER DRILLING COMPANY AND SUBSIDIARIES
Reconciliation of Non-Routine Items *
(Unaudited)
(Dollars in Thousands, except Per Share)
Three Months Ending Six Months Ending
June 30, 2009 June 30, 2009
------------- -------------
Net income $4,391 $6,497
Earnings per diluted share $0.04 $0.06
Adjustments:
DOJ investigation 4,048 9,356
----- -----
Total adjustments $4,048 $9,356
Tax effect of non-
routine adjustments (1,417) (3,275)
------ ------
Net non-routine
adjustments $2,631 $6,081
------ ------
Adjusted net income $7,022 $12,578
====== =======
Adjusted earnings
per diluted share $0.06 $0.11
===== =====
Three Months Ending Six Months Ending
June 30, 2008 June 30, 2008
------------- -------------
Previously
reported net
income $22,596 $46,484
Previously reported
earnings per diluted
share $0.20 $0.41
Restated interest expense,
net of tax - per APB 14-1 $(699) $(1,385)
Restated net income $21,897 $45,099
Restated earnings per share $0.19 $0.40
Adjustments:
Saudi Arabia $- $1,105
FIN 48 tax
benefit -
Kazakhstan - (10,560)
PNG tax - 4,127
DOJ investigation 2,885 3,326
----- -----
Total adjustments $2,885 $(2,002)
Tax effect of non-
routine adjustments (1,145) (1,320)
------ ------
Net non-routine
adjustments $1,740 $(3,322)
------ -------
Adjusted net income $23,637 $41,777
======= =======
Adjusted earnings
per diluted share $0.21 $0.37
===== =====
* Adjusted net income, a non-GAAP financial measure, excludes items that
management believes are of a non-routine nature and which detract from an
understanding of normal operating performance and comparisons with other
periods. Management also believes that results excluding these items are
more comparable to estimates provided by securities analysts and used by
them in evaluating the Company's performance.
SOURCE Parker Drilling Company
Released July 31, 2009