HOUSTON, May 8, 2014 /PRNewswire/ -- Parker Drilling
Company (NYSE-PKD), an international provider of contract drilling
and drilling-related services and rental tools to the energy
industry, today reported results for the quarter ended March 31, 2014, including a net loss of
$12.5 million, or $0.10 per diluted share, on revenues of
$229.2 million. These results
include non-routine debt extinguishment expenses of $29.7 million, pre-tax, related to a January debt
refinancing. Excluding these non-routine expenses, the Company's
adjusted net income was $5.5 million,
or $0.04 per diluted share, compared
with similarly adjusted 2013 fourth quarter net income of
$12.3 million or $0.10 per diluted share, on revenues of
$243.3 million. First quarter
adjusted EBITDA, excluding applicable non-routine expenses, was
$54.1 million, compared with
$69.6 million for the preceding
quarter.
"We expected a challenging start to the year and successfully
navigated the tough market and business conditions to deliver
overall results in line with our expectations," said Gary Rich, chairman, president and chief
executive officer.
"We increased our U.S. rental tools utilization during the
quarter, positioning the business to benefit from
industry-forecasted market growth. Revenues and earnings of our
international rental tools business declined primarily due to
planned cost increases and the impact of jobs ending sooner than
expected and job delays.
"We achieved another increase in the average dayrate for our
U.S. Gulf of Mexico barge drilling
rig fleet. Though cold weather hampered utilization at the
beginning of the quarter and average utilization for the quarter
declined, our barge rig fleet was fully utilized for the final
weeks of the period. As expected, our international drilling
operation recorded lower revenues and earnings primarily due to
start-up costs and a lower realized average dayrate, while
maintaining its overall rig fleet utilization. Our U.S.
Drilling and Technical Services segments continued to perform
well.
"In addition, we undertook a debt refinancing that reduces
interest expense and strengthens our balance sheet. We
believe we have a foundation from which to produce solid operating
performance and strong financial results through the remainder of
the year," he said.
Outlook
"Recent results and current business trends lend support to our
revenue and earnings growth expectations for the remainder of
2014," continued Mr. Rich. "We expect continued improvement
in our U.S. markets, on land and in the Gulf of Mexico, and expanded activity in our
international markets.
"Our recent increases in rental tools utilization in the U.S.
land drilling market are encouraging and position us to benefit
from market growth expected by many industry forecasts for later
this year. In addition, we expect to further expand our rental
tools participation in the growing Gulf
of Mexico offshore drilling market. The performance of our
international rental tools operation is expected to improve as new
work and delayed projects get started and we benefit from the
deployment of new capital equipment.
"We expect to maintain high utilization of our U.S. Gulf of Mexico barge drilling fleet and to
increase the operation's contribution to revenues and earnings with
the addition of Rig 55B during the 2014 second quarter.
Conditions in the international drilling markets we serve should
provide sufficient tender activity and contract renewal
opportunities to maintain our rig fleet utilization near current
levels without significant breaks in activity.
"As we continue to strengthen our ability to consistently
provide our customers with innovative, reliable and efficient
responses to their operational needs, we expect there will be
additional opportunities to enhance returns and produce further
growth," concluded Mr. Rich.
First Quarter Review
Parker Drilling's revenues for
the 2014 first quarter, compared with the 2013 fourth quarter,
declined 6 percent to $229.2 million
from $243.3 million, operating gross
margin excluding depreciation and amortization expense (segment
gross margin) decreased to $63.2
million from $84.9 million and
segment gross margin as a percentage of revenues was 27.6 percent,
compared with 34.9 percent for the prior period.
- Rental Tools segment revenues were $80.5
million, segment gross margin was $28.8 million and segment gross margin as a
percentage of revenues was 35.7 percent. Compared with the
2013 fourth quarter, revenues declined 1 percent and segment gross
margin decreased 19 percent. The declines in revenues and earnings
were primarily due to lower activity and higher costs in our
international rental tools business and continued price competition
in the U.S. land drilling market. Gross margin was further
impacted by an increase in our allowance for doubtful
accounts.
- U.S. Barge Drilling segment revenues were $30.5 million, segment gross margin was
$11.8 million, and segment gross
margin as a percentage of revenues was 38.8 percent. Compared
with the 2013 fourth quarter, revenues declined 12 percent and
segment gross margin decreased 32 percent. The business
reported 74 percent average utilization for the 2014 first quarter,
compared with 89 percent average utilization for the 2013 fourth
quarter. The decreases in revenues and earnings were
primarily the result of the decline in average utilization offset
by a 7 percent increase in average dayrate, compared with the prior
quarter. Gross margin was impacted by an increase in our
reserve for workers' compensation expense.
- U.S. Drilling segment revenues were $19.4 million, segment gross margin was
$5.6 million and segment gross margin
as a percentage of revenues was 28.7 percent. Compared with the
2013 fourth quarter, revenues increased 4 percent and segment gross
margin increased by 38 percent. These results primarily
reflect the improving performance of our new-design arctic-class
drilling rigs, supplemented by the benefit from a reduction in our
allowance for doubtful accounts.
- International Drilling segment revenues were $85.5 million, segment gross margin was
$16.4 million, and segment gross
margin as a percentage of revenues was 19.2 percent. Compared with
the 2013 fourth quarter, revenues declined 12 percent and segment
gross margin decreased 24 percent. While rig fleet
utilization remained at 73 percent, revenues and earnings declined
due to an expected reduction in reimbursable revenues and a lower
realized dayrate resulting from a greater number of days on standby
and moving rates and a change in the mix of active rigs.
Segment gross margin was further impacted by the inclusion of a
full quarter of start-up costs for our two rigs in the Kurdistan
Region of Iraq.
- Technical Services segment revenues were $13.3 million, segment gross margin was
$0.7 million, and segment gross
margin as a percentage of revenues was 4.9 percent. Compared
with the 2013 fourth quarter, revenues increased 22 percent and
segment gross margin decreased 59 percent, primarily due to a
significant increase in lower margin reimbursable revenues and
reduced engineering-related activity, compared with the prior
period.
General and administrative expense declined to $9.0 million for the 2014 first quarter, from
$18.7 million for the 2013 fourth
quarter, primarily due to certain expenses that did not recur in
the first quarter.
A first quarter debt refinancing led to debt extinguishment
expenses of $29.7 million in the
period. Proceeds from a January issuance of 6.75% Senior
Notes, along with available cash and a draw from our credit
facility, were used to redeem substantially all of our outstanding
9.125% Senior Notes. These transactions reduced our total
debt outstanding, lowered our interest rate and extended our
maturity date.
Capital expenditures for the 2014 first quarter were
$37.4 million.
Conference Call
Parker Drilling has scheduled a
conference call for 10:00 a.m. Central
time (11:00 a.m. Eastern time)
on Thursday, May 8, 2014, to review
reported results. The call will be available by telephone at
(480) 629-9645. The call can also be accessed through the
Investor Relations section of the Company's website. A replay
of the call can be accessed on the Company's website for 12 months
and will be available by telephone from May
8, 2014 through May 15, 2014
at (303) 590-3030, using the access code 4678355#.
Cautionary Statement
This press release contains certain statements that may be
deemed to be "forward-looking statements" within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934. All
statements in this press release 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 are forward-looking statements. These
statements include, but are not limited to, statements about
anticipated future financial or operational results; the outlook
for rental tools utilization and rig utilization and dayrates; the
results of past capital expenditures; scheduled start-ups of rigs;
general industry conditions such as the demand for drilling and the
factors affecting demand; competitive advantages such as
technological innovation; future operating results of the Company's
rigs, rental tools operations and projects under management; future
capital expenditures; expansion and growth opportunities;
acquisitions or joint ventures; asset sales; successful negotiation
and execution of contracts; scheduled delivery of drilling rigs or
rental equipment for operation; the strengthening of the Company's
financial position; increases in utilization or market share;
outcomes of legal proceedings; compliance with credit facility and
indenture covenants; and similar matters. These statements are
based on certain assumptions made by the Company based on
management's experience and perception of historical trends,
current conditions, anticipated future developments and other
factors believed to be appropriate. Although the Company believes
that its expectations stated in this press release are based on
reasonable assumptions, such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of the Company, that could cause actual results to differ
materially from those implied or expressed by the forward-looking
statements. These include risks relating to changes in worldwide
economic and business conditions, fluctuations in oil and natural
gas prices, compliance with existing laws and changes in laws or
government regulations, the failure to realize the benefits of, and
other risks relating to, acquisitions, the risk of cost overruns,
our ability to refinance our debt and other important factors, many
of which could adversely affect market conditions, demand for our
services, and costs, and all or any one of which could cause actual
results to differ materially from those projected. For more
information, see "Risk Factors" in the Company's Annual Report
filed on Form 10-K with the Securities and Exchange Commission and
other public filings and press releases. Each forward-looking
statement speaks only as of the date of this press release and the
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Company Description
Parker Drilling (NYSE: PKD)
provides contract drilling and drilling-related services and rental
tools to the energy industry. The Company's drilling services
business serves operators in the inland waters of the U.S.
Gulf of Mexico utilizing Parker's
barge rig fleet and in select international markets and
harsh-environment regions utilizing Parker-owned and customer-owned
equipment. The Company's rental tools business supplies premium
equipment and well services to operators on land and offshore in
the U.S. and international markets. More information about
Parker Drilling can be found on the
Company's website at www.parkerdrilling.com.
PARKER DRILLING
COMPANY
|
Consolidated
Condensed Balance Sheets
|
(Dollars in
Thousands)
|
|
|
|
|
|
|
March 31,
2014
|
|
December 31,
2013
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and Cash
Equivalents
|
$
93,061
|
|
$
148,689
|
Accounts and Notes
Receivable, Net
|
264,437
|
|
257,889
|
Rig Materials and
Supplies
|
44,488
|
|
41,781
|
Deferred
Costs
|
10,698
|
|
13,682
|
Deferred Income
Taxes
|
8,973
|
|
9,940
|
Other Current
Assets
|
43,475
|
|
47,302
|
TOTAL CURRENT
ASSETS
|
465,132
|
|
519,283
|
|
|
|
|
PROPERTY, PLANT AND
EQUIPMENT, NET
|
874,300
|
|
871,356
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
Deferred Income
Taxes
|
118,431
|
|
102,420
|
Other
Assets
|
42,505
|
|
41,697
|
TOTAL OTHER
ASSETS
|
160,936
|
|
144,117
|
|
|
|
|
TOTAL
ASSETS
|
$
1,500,368
|
|
$
1,534,756
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Current Portion
of Long-Term Debt
|
$
18,801
|
|
$
25,000
|
Accounts Payable and
Accrued Liabilities
|
184,650
|
|
182,152
|
TOTAL CURRENT
LIABILITIES
|
203,451
|
|
207,152
|
|
|
|
|
LONG-TERM
DEBT
|
612,574
|
|
628,781
|
|
|
|
|
LONG-TERM DEFERRED
TAX LIABILITY
|
41,026
|
|
38,767
|
|
|
|
|
OTHER LONG-TERM
LIABILITIES
|
17,527
|
|
26,914
|
|
|
|
|
TOTAL CONTROLLING
INTEREST IN STOCKHOLDERS' EQUITY
|
622,526
|
|
631,696
|
Noncontrolling
interest
|
3,264
|
|
1,446
|
TOTAL
EQUITY
|
625,790
|
|
633,142
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
1,500,368
|
|
$
1,534,756
|
|
|
|
|
|
|
|
|
Current
Ratio
|
2.29
|
|
2.51
|
|
|
|
|
Total Debt as a
Percent of Capitalization
|
50%
|
|
51%
|
|
|
|
|
Book Value Per Common
Share
|
$
5.14
|
|
$
5.24
|
PARKER DRILLING
COMPANY
|
Consolidated
Condensed Statement Of Operations
|
(Dollars in
Thousands, Except Per Share Data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Three Months Ended
March 31,
|
|
|
2014
|
|
2013
|
|
2013
|
|
|
|
|
|
|
REVENUES
|
$
229,225
|
|
$
167,135
|
|
$
243,321
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
Operating
Expenses
|
166,025
|
|
116,746
|
|
158,380
|
Depreciation and
Amortization
|
34,337
|
|
29,512
|
|
36,378
|
|
200,362
|
|
146,258
|
|
194,758
|
TOTAL OPERATING GROSS
MARGIN
|
28,863
|
|
20,877
|
|
48,563
|
|
|
|
|
|
|
General and
Administrative Expense
|
(8,964)
|
|
(12,845)
|
|
(18,738)
|
Provision for
Reduction in Carrying Value of Certain Assets
|
-
|
|
-
|
|
(2,544)
|
Gain (Loss) on
Disposition of Assets, Net
|
(129)
|
|
1,148
|
|
1,234
|
|
|
|
|
|
|
TOTAL OPERATING
INCOME
|
19,770
|
|
9,180
|
|
28,515
|
|
|
|
|
|
|
OTHER INCOME AND
(EXPENSE):
|
|
|
|
|
|
Interest
Expense
|
(12,039)
|
|
(10,006)
|
|
(13,946)
|
Interest
Income
|
32
|
|
59
|
|
58
|
Loss on
extinguishment of debt
|
(29,673)
|
|
-
|
|
-
|
Change in fair value
of derivative positions
|
-
|
|
37
|
|
-
|
Other
|
895
|
|
(202)
|
|
2,255
|
TOTAL OTHER
EXPENSE
|
(40,785)
|
|
(10,112)
|
|
(11,633)
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE
INCOME TAXES
|
(21,015)
|
|
(932)
|
|
16,882
|
|
|
|
|
|
|
INCOME TAX EXPENSE
(BENEFIT)
|
(8,623)
|
|
(1,504)
|
|
6,766
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
(12,392)
|
|
572
|
|
10,116
|
Less: net income
(loss) attributable to noncontrolling interest
|
157
|
|
(20)
|
|
(58)
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CONTROLLING INTEREST
|
$
(12,549)
|
|
$
592
|
|
$
10,174
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE - BASIC
|
|
|
|
|
|
Net Income
(loss)
|
$
(0.10)
|
|
$
0.00
|
|
$
0.08
|
|
|
|
|
|
|
EARNINGS PER SHARE -
DILUTED
|
|
|
|
|
|
Net Income
(loss)
|
$
(0.10)
|
|
$
0.00
|
|
$
0.08
|
|
|
|
|
|
|
NUMBER OF COMMON
SHARES USED IN COMPUTING EARNINGS PER SHARE
|
|
|
|
|
|
Basic
|
120,368,650
|
|
118,867,678
|
|
119,930,516
|
Diluted
|
120,368,650
|
|
120,072,574
|
|
121,608,427
|
PARKER DRILLING
COMPANY
|
Selected Financial
Data
|
(Dollars in
Thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
2014
|
|
2013
|
|
2013
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
Rental
Tools
|
|
$
80,506
|
|
$
57,082
|
|
$
81,324
|
|
U.S. Barge
Drilling
|
|
30,490
|
|
29,865
|
|
34,770
|
|
U.S.
Drilling
|
|
19,417
|
|
11,635
|
|
18,690
|
|
International
Drilling
|
|
85,469
|
|
64,650
|
|
97,568
|
|
Technical
Services
|
|
13,343
|
|
3,903
|
|
10,969
|
|
Construction
Contract
|
|
-
|
|
-
|
|
-
|
|
Total
Revenues
|
|
229,225
|
|
167,135
|
|
243,321
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Rental
Tools
|
|
51,755
|
|
24,875
|
|
45,736
|
|
U.S. Barge
Drilling
|
|
18,654
|
|
17,441
|
|
17,416
|
|
U.S.
Drilling
|
|
13,854
|
|
11,309
|
|
14,663
|
|
International
Drilling
|
|
69,070
|
|
59,554
|
|
75,904
|
|
Technical
Services
|
|
12,692
|
|
3,567
|
|
9,389
|
|
Construction
Contract
|
|
-
|
|
-
|
|
(4,728)
|
|
Total
Operating Expenses
|
|
166,025
|
|
116,746
|
|
158,380
|
|
|
|
|
|
|
|
|
OPERATING GROSS
MARGIN:
|
|
|
|
|
|
|
|
Rental
Tools
|
|
28,751
|
|
32,207
|
|
35,588
|
|
U.S. Barge
Drilling
|
|
11,836
|
|
12,424
|
|
17,354
|
|
U.S.
Drilling
|
|
5,563
|
|
326
|
|
4,027
|
|
International
Drilling
|
|
16,399
|
|
5,096
|
|
21,664
|
|
Technical
Services
|
|
651
|
|
336
|
|
1,580
|
|
Construction
Contract
|
|
-
|
|
-
|
|
4,728
|
|
Depreciation and
Amortization
|
|
(34,337)
|
|
(29,512)
|
|
(36,378)
|
|
Total
Operating Gross Margin
|
|
28,863
|
|
20,877
|
|
48,563
|
PARKER DRILLING
COMPANY
|
Adjusted
EBITDA
|
(Dollars in
Thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2014
|
|
December 31,
2013
|
|
September 30,
2013
|
|
June 30,
2013
|
|
March 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
Attributable to Controlling Interest
|
|
$
(12,549)
|
|
$
10,174
|
|
$
7,970
|
|
$
8,281
|
|
$
592
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax (Benefit)
Expense
|
|
(8,623)
|
|
6,766
|
|
9,112
|
|
11,233
|
|
(1,504)
|
|
Interest
Expense
|
|
12,039
|
|
13,946
|
|
13,127
|
|
10,741
|
|
10,006
|
|
Other Income and
Expense
|
|
28,746
|
|
(2,313)
|
|
5,234
|
|
(1,761)
|
|
107
|
|
(Gain) Loss on
Disposition of Assets, Net
|
|
129
|
|
(1,234)
|
|
(1,094)
|
|
(517)
|
|
(1,148)
|
|
Depreciation and
Amortization
|
|
34,337
|
|
36,378
|
|
35,882
|
|
32,280
|
|
29,512
|
|
Provision for
Reduction in Carrying Value of Certain Assets
|
|
-
|
|
2,544
|
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
54,079
|
|
66,261
|
|
70,231
|
|
60,257
|
|
37,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Non-routine Items
|
|
-
|
|
3,306
|
|
4,819
|
|
11,390
|
|
3,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA after
Non-routine Items
|
|
$
54,079
|
|
$
69,567
|
|
$
75,050
|
|
$
71,647
|
|
$
41,028
|
|
SOURCE Parker Drilling Company