Parker Drilling Reports First Quarter 2008 Results
HOUSTON, May 6 /PRNewswire-FirstCall/ -- Parker Drilling Company (NYSE: PKD), a global drilling contractor and service provider, today reported financial and operating results for the first quarter 2008, as higher dayrates and utilization in the company's international segment partially offset an expected softening of the U.S. barge rig market.
"Parker Drilling had a solid first quarter, with a substantial increase in total revenues over the comparable prior year quarter due to higher contributions from our international drilling and Quail Tools segments and a better-than-expected performance from our U.S. deep barge rig segment," remarked Robert L. Parker Jr., chairman and chief executive officer. "Utilization in our international and deep barge rig markets is strong, and financial results from our international and Quail Tools segments should continue to improve throughout 2008.
"With this morning's announcement of our return to Alaska with two newbuild rigs incorporating the latest advances in arctic drilling technology, we continue to execute our strategic growth plan of providing a fleet of advanced rigs preferred by our customers in all market conditions."
First Quarter Earnings and Financial Highlights
For the three months ended March 31, 2008, Parker posted net income of $23.9 million, or $0.21 per diluted share, on revenues of $173.3 million, compared to net income of $30.0 million, or $0.27 per diluted share on revenues of $151.3 million for the first quarter 2007. Net income for the first quarter of 2008 included a net benefit of $0.04 per diluted share from non-routine items, comprised of a $1.1 million loss from our Saudi Arabia partnership, a net tax benefit of $6.4 million relating to a settlement of the interest portion of a tax case in Kazakhstan and a valuation allowance on a net operating loss carryforward in Papua New Guinea. Net income in the first quarter 2007 included net non-routine income of $0.05 per diluted share, or $6.0 million, relating primarily to the gain on the sale of two workover barge rigs.
EBITDA was $61.0 million for the first quarter 2008 compared to $61.7 million in the first quarter 2007. Higher dayrates and utilization resulted in a 32 percent EBITDA improvement for Parker's international operations over the first quarter 2007. Quail Tools also showed improvement, with a 26 percent increase from the first quarter 2007. EBITDA for the U.S. barge segment was $24.4 million, compared to $32.4 million in the first quarter of 2007. (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.)
Capital expenditures for the three months ended March 31, 2008 totaled $43.2 million. Total debt was $388.6 million, and the Company's cash, cash equivalents and marketable securities totaled $44.7 million at March 31, 2008.
Average utilization for the Gulf of Mexico barge rigs for the first quarter 2008 was 76 percent, compared to the 73 percent reported for the first quarter 2007 and the 83 percent reported for the fourth quarter 2007. Current barge rig utilization is 93 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico averaged $44,800 per day during the first quarter 2008, compared to $51,600 per day in the first quarter 2007 and $43,900 per day in the fourth quarter 2007. (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 first quarter 2008 was 72 percent, compared to the 83 percent reported for the fourth quarter 2007, but higher than the 63 percent in the first quarter 2007. Current international utilization is 77 percent.
Quail Tools, Parker's drilling and production rental tools subsidiary with six stores located in the most active resource plays in North America, continued its outstanding performance as it recorded EBITDA of $23.7 million in the first quarter 2008, up $4.8 million from the first quarter 2007.
"Even though overall contributions from the international segment were up significantly from the prior-year quarter, results were impacted by increased costs and demobilization in our Africa/Middle East markets," said Parker. "However, the majority of these costs were absorbed during the first quarter; and as new contracts commence operations we expect strengthening contributions from our international segment for the remainder of 2008.
"Quail Tools has continued to outperform, as first quarter EBITDA significantly exceeded the prior-year period as it reaped substantial benefits from increasing deepwater activity in the Gulf of Mexico as well as increased contributions from its stores serving the Williston Basin and Barnett Shale markets. Going forward, we are confident in the strength of this segment and we expect continued growth throughout the year.
"Despite lower quarter-over-quarter dayrates, our U.S. barge rig segment completed the first quarter of 2008 above expectations. Deep barge rig dayrates actually increased sequentially, and utilization was also higher than our competition in this market, which we attribute to our fleet of preferred rigs and an industry-best workforce. In the near term, we expect our U.S. barge segment to remain active, with a moderate upswing in the second half of the year.
"Our outstanding operational performance in extended-reach, arctic and environmentally sensitive drilling has revolutionized the search for oil and gas, and we are securing new contracts drawing on our expertise as a result, as indicated in this morning's Alaskan Letter of Intent announcement and as forecast in our strategic growth plan. Our outstanding track record at the Sakhalin-1 project and our history of success in Alaska, Russia and Kazakhstan are critical factors that distinguish us from our competition as E&P companies look to exploit increasingly remote and difficult fields. Parker Drilling has long been a leader in developing innovative drilling technology for improving performance and lowering the total cost of drilling for our customers. We anticipate that our unique capabilities will continue to drive growth in 2008 and 2009," Parker concluded.
Parker Drilling has scheduled a conference call at 9 a.m. CDT (10 a.m. EDT) on Tuesday, May 6, 2008 to discuss first quarter 2008 results. Those interested in participating in the call may dial in at 303-262-2191. The conference call replay can be accessed from May 6 through May 13 by dialing (800) 405-2236 and using the access code 11113191#. 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 and the factors effecting 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. 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, 2007. 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 Statements of Operations (Unaudited) Three Months Ended March 31, 2008 2007 (Dollars in Thousands) DRILLING AND RENTAL REVENUES U.S. Drilling $45,888 $60,978 International Drilling 68,740 41,914 Project Management and Engineering Services 19,179 18,406 Rental Tools 39,471 29,975 TOTAL DRILLING AND RENTAL REVENUES 173,278 151,273 DRILLING AND RENTAL OPERATING EXPENSES U.S. Drilling 21,522 26,749 International Drilling 52,621 29,729 Project Management and Engineering Services 15,661 16,066 Rental Tools 15,818 11,163 Depreciation and Amortization 26,166 18,059 TOTAL DRILLING AND RENTAL OPERATING EXPENSES 131,788 101,766 DRILLING AND RENTAL OPERATING INCOME 41,490 49,507 General and Administrative Expense (6,668) (5,888) Gain on Disposition of Assets, Net 579 16,404 TOTAL OPERATING INCOME 35,401 60,023 OTHER INCOME AND (EXPENSE) Interest Expense (5,690) (6,330) Change in Fair Value of Derivative Position - (381) Interest Income 368 1,784 Equity in Loss of Unconsolidated Joint Venture and Related Charges, Net of Tax (1,105) - Other Income (Expense) , Net 60 (993) TOTAL OTHER INCOME AND (EXPENSE) (6,367) (5,920) INCOME BEFORE INCOME TAXES 29,034 54,103 INCOME TAX (BENEFIT) EXPENSE Current Tax (Benefit) Expense (10,643) 22,012 Deferred Tax Expense 15,789 2,097 TOTAL INCOME TAX EXPENSE 5,146 24,109 NET INCOME $23,888 $29,994 EARNINGS PER SHARE - BASIC Net Income $0.22 $0.28 EARNINGS PER SHARE - DILUTED Net Income $0.21 $0.27 AVERAGE COMMON SHARES OUTSTANDING Basic 110,546,311 107,743,870 Diluted 111,481,301 109,464,663 PARKER DRILLING COMPANY AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Unaudited) March 31, December 31, 2008 2007 ASSETS (Dollars in Thousands) CURRENT ASSETS Cash and Cash Equivalents $44,733 $60,124 Accounts and Notes Receivable, Net 181,011 166,706 Rig Materials and Supplies 25,678 24,264 Deferred Costs 9,552 7,795 Deferred Income Taxes 9,423 9,423 Other Current Assets 53,270 54,871 TOTAL CURRENT ASSETS 323,667 323,183 PROPERTY, PLANT AND EQUIPMENT, NET 600,200 585,888 OTHER ASSETS Goodwill 100,315 100,315 Deferred Taxes 23,396 40,121 Other Assets 35,060 27,480 TOTAL OTHER ASSETS 158,771 167,916 TOTAL ASSETS $1,082,638 $1,076,987 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current Portion of Long-Term Debt $35,000 $20,000 Accounts Payable and Accrued Liabilities 103,831 104,180 TOTAL CURRENT LIABILITIES 138,831 124,180 LONG-TERM DEBT 353,559 353,721 LONG-TERM DEFERRED TAX LIABILITY 8,250 8,044 OTHER LONG-TERM LIABILITIES 20,675 56,318 STOCKHOLDERS' EQUITY 561,323 534,724 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,082,638 $1,076,987 Current Ratio 2.33 2.60 Total Long-Term Debt as a Percent of Capitalization 41% 41% Book Value Per Common Share $4.99 $4.78 PARKER DRILLING COMPANY AND SUBSIDIARIES Selected Financial Data (Unaudited) Three Months Ended March 31, December 31, 2008 2007 2007 (Dollars in Thousands) DRILLING AND RENTAL REVENUES U.S. Offshore Drilling $45,888 $54,505 $50,889 U.S. Land Drilling - 6,473 - International Land Drilling 58,674 34,115 61,587 International Offshore Drilling 10,066 7,799 8,143 Project Management and Engineering Services 19,179 18,406 19,081 Rental Tools 39,471 29,975 41,126 Total Drilling and Rental Revenues 173,278 151,273 180,826 DRILLING AND RENTAL OPERATING EXPENSES U.S. Offshore Drilling 21,522 22,124 20,250 U.S. Land Drilling - 4,625 - International Land Drilling 46,056 24,640 47,045 International Offshore Drilling 6,565 5,089 5,442 Project Management and Engineering Services 15,661 16,066 15,977 Rental Tools 15,818 11,163 16,114 Total Drilling and Rental Operating Expenses 105,622 83,707 104,828 DRILLING AND RENTAL OPERATING INCOME U.S. Offshore Drilling 24,366 32,381 30,639 U.S. Land Drilling - 1,848 - International Land Drilling 12,618 9,475 14,542 International Offshore Drilling 3,501 2,710 2,701 Project Management and Engineering Services 3,518 2,340 3,104 Rental Tools 23,653 18,812 25,012 Depreciation and Amortization (26,166) (18,059) (25,059) Total Drilling and Rental Operating Income 41,490 49,507 50,939 General and Administrative Expense (6,668) (5,888) (6,328) Provision for Reduction in Carrying Value of Certain Assets - - (371) Gain (loss) on Disposition of Assets, Net 579 16,404 (784) TOTAL OPERATING INCOME $35,401 $60,023 $43,456 Marketable Rig Count Summary As of March 31, 2008 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 Rigs Asia Pacific 8 Africa - Middle East 3 Latin America 8 CIS 8 Total International Land Rigs 27 International Barge Rigs Mexico 1 Caspian Sea 1 Total International Barge Rigs 2 Total Marketable Rigs 44 Adjusted EBITDA (Unaudited) (Dollars In Thousands) Three Months Ending March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 Net Income from Continuing Operations $23,888 $34,571 $22,653 $16,860 $29,994 Adjustments: Income Tax (Benefit) Expense 5,146 (21,379) 19,180 15,813 24,109 Total Other Income and Expense 6,367 30,264 8,767 4,231 5,920 Loss/(Gain) on Disposition of Assets, Net (579) 784 (543) (269) (16,404) Depreciation and Amortization 26,166 25,059 23,043 19,642 18,059 Provision for Reduction in Carrying Value of Certain Assets - 371 1,091 - - Adjusted EBITDA $60,988 $69,670 $74,191 $56,277 $61,678 December September June March December 31, 30, 30, 31, 31, 2006 2006 2006 2006 2005 Net Income from Continuing Operations $37,168 $18,639 $13,761 $11,458 $56,707 Adjustments: Income Tax (Benefit) Expense (5,954) 13,173 14,694 14,496 (39,087) Total Other Income and Expense 3,554 8,741 5,731 7,865 10,251 Loss/(Gain) on Disposition of Assets, Net (672) (4,328) (2,125) (448) (3,185) Depreciation and Amortization 17,605 16,993 17,715 16,957 16,619 Provision for Reduction in Carrying Value of Certain Assets - - - - 2,584 Adjusted EBITDA $51,701 $53,218 $49,776 $50,328 $43,889
SOURCE Parker Drilling Company
Released May 6, 2008