Press Releases
Parker Drilling Reports 2009 First Quarter 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 2009 first quarter. For the period, Parker Drilling reported net income of $2.1 million or $0.02 per diluted share on revenues of $173.9 million. Excluding non-routine items the Company reported net income of $5.6 million or $0.05 per diluted share. (A reconciliation of net income excluding non-routine items is provided in the attached financial tables).
Significant results and achievements of the first quarter include:
-- Revenues of $173.9 million, on par with the prior year's first
quarter, with revenue increases in the International Drilling and
Project Management and Engineering Services segments. Including
revenues from the new Construction Contract segment, these offset
declines in U.S. Drilling and Rental Tools;
-- A significant year-to-year increase in segment gross margin as a percent
of revenues for International Drilling, reaching 35.7 percent for the
quarter;
-- International average rig utilization of 79 percent, ahead of last
year's first quarter average utilization of 73 percent;
-- On-schedule progress in the construction of the BP-owned Liberty rig and
two Parker-owned arctic Alaska rigs; and
-- A first quarter company safety performance of 0.77 Total Recordable
Incident Rate (TRIR), better than the Company's 2009 TRIR goal of
0.92.
"In a difficult market that has impacted every sector of the worldwide energy industry, Parker delivered a successful performance for the quarter, supported by our geographical diversification and balanced business mix," said Robert L. Parker Jr., chairman and chief executive officer. "The Gulf of Mexico barge business has pared back its operating costs to sustain itself through the downturn in its market while capturing a significant portion of the drilling work that has been available. The longer-term nature and oil drilling focus of our international operations have provided a strong boost to revenues and earnings. The impact on Rental Tools from the decline in U.S. land drilling was softened by its position in the stronger shale regions and the strength of its customer relationships.
"The industry outlook for 2009 remains subdued, and will continue to impact the near-term prospects for the Company. Nevertheless, I expect our operating performance to improve as the year progresses, as we gain the benefits of a leaner cost structure; our strong technical, operational and safety leadership and our employee commitment to customer service," Mr. Parker concluded.
2009 First Quarter Financial Review
For the three months ended March 31, 2009, Parker Drilling posted net income of $2.1 million, or $0.02 per diluted share, on revenues of $173.9 million, compared to net income of $23.2 million, or $0.21 per diluted share, on revenues of $173.3 million for the first quarter 2008. Excluding the impact of non-routine items, adjusted net income for the 2009 first quarter was $5.6 million or $0.05 per diluted share, compared with 2008 first quarter adjusted net income of $18.1 million or $0.16 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 first quarter included non-routine net after-tax expense of $3.5 million, or $0.03 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 first quarter 2008 included net after-tax income of $5.1 million, or $0.05 per diluted share, for non-routine items. (Details of the non-routine items are provided in the attached financial tables.)
Total revenues for the 2009 first quarter were relatively unchanged compared to the same period last year. U.S. Barge Drilling revenues declined 78 percent, to $9.9 million from $45.9 million, due to lower utilization and dayrates for the Gulf of Mexico barge drilling fleet. International Drilling revenues rose 13 percent to $77.4 million from $68.7 million, primarily the result of higher average fleet utilization. Rental Tools revenues decreased 4 percent to $37.9 million from $39.5 million, with the impact of the recent decline in U.S. land and Gulf of Mexico shelf drilling mostly offset by increased coverage in the active shale regions and an increase in demand for workover equipment. Revenues for Project Management and Engineering Services increased to $32.1 million from $19.2 million, primarily as a result of higher revenues from the Sakhalin projects and additional engineering and operations and maintenance (O&M) services. Construction Contract segment revenues of $16.7 million reflect the quarter's progress on the construction contract for the BP-owned Liberty ultra-extended-reach rig.
Adjusted EBITDA for the first quarter 2009 was $39.7 million compared to $61.0 million in the first 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 shown on the attached tables). The Company's U.S. Barge Drilling segment's EBITDA was a loss of $3.3 million, compared to income of $24.4 million in the prior year's first quarter, reflecting the impact of lower utilization and dayrates. The International Drilling segment's EBITDA increased 71 percent to $27.6 million, compared to first quarter 2008 segment EBITDA of $16.1 million, primarily the result of an increase in fleet utilization and lower operating costs. Rental Tools achieved segment EBITDA of $21.4 million, 9 percent below the prior year first quarter segment EBITDA of $23.7 million. Delivering high quality products and customer service has provided support to strong operating margins for Quail Tools. Segment EBITDA for Project Management and Engineering Services increased 75 percent to $6.2 million, compared to the prior year's first quarter level of $3.5 million, reflecting higher revenues for the Sakhalin projects and additional O&M and engineering projects.
Operations Review
-- Average utilization for the Company's Gulf of Mexico barge rigs for
the first quarter 2009 was 25 percent, compared to the 77 percent
reported for the first quarter 2008 and the 61 percent reported for the
fourth quarter 2008. Currently, barge rig utilization is 40 percent.
The Company's barge dayrates in the Gulf of Mexico averaged $28,000
per day during the first quarter 2009, compared to $41,200 per day in
the first quarter 2008 and $39,400 per day in the fourth quarter 2008.
(Average dayrates for each classification of barge by quarter are
available in the "Dayrates - GOM" schedule posted on
Parker's Web site under "Investor Relations" at
"Quarterly Support Materials".)
-- Average utilization of international rigs, both land and barge rigs, for
the first quarter 2009 was 79 percent, compared to 73 percent reported
for the first quarter 2008 and 87 percent reported for the fourth
quarter 2008. (Average utilization for each international region's
rig fleet by quarter is available in the "Rig Utilization
Schedule" posted on Parker's Web site under "Investor
Relations" at "Quarterly Support Materials".)
-- The Company's Americas region operated at 90 percent
utilization, with nine of ten rigs working throughout the quarter.
Most of the working rigs in this region are on multi-well contracts
that extend beyond 2009.
-- Parker's twelve rigs located in the Commonwealth of Independent
States / Africa Middle East (CIS / AME) region achieved average
utilization of 86 percent during the quarter. Eleven rigs worked
during the quarter, with one rig completing its contracted work in
January. The majority of the working 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 64 percent utilization during the quarter. Five of the
eight rigs worked during the quarter, one of which completed its
contracted work in January. Most contracts in this region are for
short duration projects. One working rig is on a contract that
extends beyond 2009.
-- In Project Management and Engineering Services, the Yastreb rig,
operated by Parker Drilling for the Sakhalin-1 consortium, completed its
move north and spent much of the first quarter preparing to drill the
Odoptu field.
Capital expenditures for the three months ended March 31, 2009 totaled $51.4 million, including $17.5 million for the construction of Parker's two newbuild land rigs for Alaska; and $17.2 million for tubular goods and other rental equipment.
At the end of the period total debt was $446.5 million, and the Company's total debt-to-capitalization ratio was 43.2 percent. Adjusted for the Company's cash and cash equivalents balance of $148.4 million at March 31, 2009, Parker's ratio of net-debt-to-net capitalization increased to 33.7 percent from 31.6 percent at the end of 2008. The Company's $50 million term loan begins to amortize at $3.0 million per quarter beginning the third quarter 2009, 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 Wednesday, May 6, 2009 to discuss first quarter 2009 results. Those interested in listening to the call by telephone may do so by dialing (303) 228-2964. 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 May 6 through May 13 by dialing (303) 590-3000 and using the access code 11130198#, 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
March 31, 2009 December 31, 2008
-------------- -----------------
(Unaudited)
ASSETS (Dollars in Thousands)
CURRENT ASSETS
Cash and Cash Equivalents $148,403 $172,298
Accounts and Notes
Receivable, Net 182,333 186,164
Rig Materials and Supplies 30,201 30,241
Deferred Costs 7,044 7,804
Deferred Income Taxes 9,735 9,735
Other Current Assets 61,546 67,049
------ ------
TOTAL CURRENT ASSETS 439,262 473,291
------- -------
PROPERTY, PLANT AND
EQUIPMENT, NET 707,128 675,548
OTHER ASSETS
Deferred Income Taxes 25,852 22,956
Other Assets 33,060 33,925
------ ------
TOTAL OTHER ASSETS 58,912 56,881
------ ------
TOTAL ASSETS $1,205,302 $1,205,720
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of
Long-Term Debt $9,000 $6,000
Accounts Payable and
Accrued Liabilities 145,635 152,528
------- -------
TOTAL CURRENT LIABILITIES 154,635 158,528
------- -------
LONG-TERM DEBT 437,464 435,394
LONG-TERM DEFERRED
TAX LIABILITY 7,133 8,230
OTHER LONG-TERM
LIABILITIES 19,342 21,396
STOCKHOLDERS' EQUITY 586,728 582,172
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,205,302 $1,205,720
========== ==========
Current Ratio 2.84 2.99
Total Debt as a Percent of
Capitalization 43% 43%
Book Value Per
Common Share $5.04 $5.13
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended
March 31,
-----------------
2009 2008
---- ----
(Dollars in Thousands)
REVENUES:
U.S. Drilling $9,856 $45,888
International Drilling 77,381 68,740
Project Management and Engineering
Services 32,054 19,179
Construction Contract 16,745 -
Rental Tools 37,889 39,471
------ ------
TOTAL REVENUES 173,925 173,278
------- -------
OPERATING EXPENSES:
U.S. Drilling 13,136 21,522
International Drilling 49,777 52,621
Project Management and Engineering
Services 25,894 15,661
Construction Contract 15,914 -
Rental Tools 16,454 15,818
Depreciation and Amortization 27,124 26,166
------ ------
TOTAL OPERATING EXPENSES 148,299 131,788
------- -------
TOTAL OPERATING GROSS
MARGIN 25,626 41,490
------ ------
General and Administrative Expense (13,060) (6,668)
Gain on Disposition of Assets, Net 78 579
-- ---
TOTAL OPERATING INCOME 12,644 35,401
------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (8,066) (6,837)
Interest Income 286 368
Equity in Loss of Unconsolidated Joint
Venture and Related Charges, net of tax - (1,105)
Other Income (12) 60
--- --
TOTAL OTHER INCOME AND (EXPENSE) (7,792) (7,514)
------ ------
INCOME BEFORE INCOME TAXES 4,852 27,887
----- ------
INCOME TAX EXPENSE (BENEFIT)
Current 6,738 (10,643)
Deferred (3,992) 15,328
------ ------
TOTAL INCOME TAX EXPENSE (BENEFIT) 2,746 4,685
----- -----
NET INCOME $2,106 $23,202
====== =======
EARNINGS PER SHARE - BASIC
Net Income $0.02 $0.21
EARNINGS PER SHARE - DILUTED
Net Income $0.02 $0.21
NUMBER OF COMMON SHARES USED IN
COMPUTING EARNINGS PER SHARE
Basic 112,260,517 110,546,311
Diluted 113,366,444 111,481,301
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
Three Months Ended
------------------------------
March 31, December 31,
------------- ------------
2009 2008 2008
---- ---- ----
(Dollars in Thousands)
REVENUES:
U.S. Drilling $9,856 $45,888 $33,634
International Drilling 77,381 68,740 86,211
Project Management and
Engineering Services 32,054 19,179 37,928
Construction Contract 16,745 - 8,911
Rental Tools 37,889 39,471 45,696
------ ------ ------
Total Revenues 173,925 173,278 212,380
------- ------- -------
OPERATING EXPENSES:
U.S. Drilling 13,136 21,522 18,929
International Drilling 49,777 52,621 58,494
Project Management and
Engineering Services 25,894 15,661 29,858
Construction Contract 15,914 - 8,442
Rental Tools 16,454 15,818 17,034
------ ------ ------
Total Operating Expenses 121,175 105,622 132,757
------- ------- -------
OPERATING GROSS
MARGIN:
U.S. Drilling (3,280) 24,366 14,705
International Drilling 27,604 16,119 27,717
Project Management and
Engineering Services 6,160 3,518 8,070
Construction Contract 831 - 469
Rental Tools 21,435 23,653 28,662
Depreciation and
Amortization (27,124) (26,166) (31,961)
------- ------- -------
Total Operating
Gross Margin 25,626 41,490 47,662
General and
Administrative Expense (13,060) (6,668) (10,288)
Impairment of Goodwill - - (100,315)
Gain on Disposition of
Assets, Net 78 579 683
------- ------- --------
TOTAL OPERATING
INCOME (LOSS) $12,644 $35,401 $(62,258)
======= ======= ========
Marketable Rig Count Summary
As of March 31, 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
-----------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2009 2008 2008 2008 2008
--------- ------------ ------------- -------- ---------
Previously
Reported
Net Income
(Loss) $2,106 $(39,477) $18,551 $22,596 $23,888
Restated
Interest
Expense,
Net
of Tax -
Per
APB 14-1 - (724) (721) (699) (686)
------ ---- ---- ---- ----
Restated
Net
Income
(Loss) 2,106 (40,201) 17,830 21,897 23,202
Adjustments:
Income
Tax
(Benefit)
Expense 2,746 (31,178) 19,673 13,762 4,685
Total
Other
Income
and
Expense 7,792 9,121 6,344 6,531 7,514
Loss/(Gain)
on
Disposition
of Assets,
Net (78) (683) (799) (636) (579)
Impairment
of Goodwill - 100,315
Depreciation
and
Amortization 27,124 31,961 30,663 28,166 26,166
Provision
for
Reduction
in
Carrying
Value of
Certain
Assets - - - - -
------ ------ ------ ------ ------
Adjusted
EBITDA $39,690 $69,335 $73,711 $69,720 $60,988
======= ======= ======= ======= =======
Three Months Ended
---------------------------------------------------
December 31, September 30, June 30, March 31,
2007 2007 2007 2007
------------- ------------- --------- ---------
Previously Reported
Net Income (Loss) $34,571 $22,653 $16,860 $29,994
Restated
Interest
Expense, Net
of Tax - Per
APB 14-1 (670) (562) - -
---- ---- ----- ------
Restated Net
Income (Loss) 33,901 22,091 16,860 29,994
Adjustments:
Income Tax
(Benefit)
Expense (21,830) 18,803 15,813 24,109
Total Other
Income and
Expense 31,385 9,706 4,231 5,920
Loss/(Gain)
on
Disposition
of Assets,
Net 784 (543) (269) (16,404)
Impairment
of Goodwill
Depreciation and
Amortization 25,059 23,043 19,642 18,059
Provision for
Reduction in
Carrying Value of
Certain Assets 371 1,091 - -
--- ----- ------ -----
Adjusted EBITDA $69,670 $74,191 $56,277 $61,678
======= ======= ======= =======
PARKER DRILLING COMPANY AND SUBSIDIARIES
Reconciliation of Non-Routine Items *
(Unaudited)
(Dollars in Thousands, except Per Share)
Three Months Ending
March 31, 2009
--------------
Net income $2,106
Earnings per diluted share $0.02
Adjustments:
DOJ investigation 5,308
-----
Total adjustments $5,308
Tax effect of non-routine adjustments (1,858)
------
Net non-routine adjustments $3,450
------
Adjusted net income $5,556
======
Adjusted earnings per diluted share $0.05
=====
Three Months Ending
March 31, 2008
--------------
Previously reported net income $23,888
Previously reported earnings per diluted
share $0.21
Restated interest expense, net of tax - per
APB 14-1 $(686)
Restated net income $23,202
Restated earnings per share $0.21
Adjustments:
Saudi Arabia $1,105
FIN 48 tax benefit - Kazakhstan (10,560)
PNG tax 4,127
DOJ investigation 441
---
Total adjustments $(4,887)
Tax effect of non-routine adjustments (175)
----
Net non-routine adjustments $(5,062)
-------
Adjusted net income $18,140
=======
Adjusted earnings per diluted share $0.16
=====
* 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 May 6, 2009