Parker Drilling Reports 2013 Third Quarter Results

HOUSTON, Nov. 6, 2013 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD), an international provider of rental tools and drilling services to the energy industry, today reported results for the quarter ended September 30, 2013, including net income of $8.0 million and $0.07 per diluted share on revenues of $237.8 million.  These results include non-routine expenses of $5.2 million associated with a July debt refinancing and $4.8 million related to the April acquisition of International Tubular Services Limited (ITS).  Excluding these non-routine expenses, the Company earned net income of $14.5 million and $0.12 per diluted share, compared with similarly adjusted 2013 second quarter net income of $17.3 million and $0.14 per diluted share, on revenues of $226.0 million.  Adjusted EBITDA, excluding non-routine expenses, was $74.5 million, compared with $71.4 million for the preceding quarter.

(Logo: http://photos.prnewswire.com/prnh/20050620/PARKERDRILLINGLOGO)

"Our recent operating results demonstrate the strengthening of our business and the effects of our operating strategy.  The third quarter's results reflect operational gains in several areas, most notably in international drilling; our management of the continued challenges in the U.S. land drilling market for rental tools; and our strategic response to seasonal conditions in the U.S. Gulf of Mexico barge drilling market," said Gary Rich, president and chief executive officer.  "In addition, we made great progress integrating the recent ITS acquisition, achieving long-lasting business synergies and improved financial performance.

"Building on our success in prior quarters, we raised average utilization of our international rig fleet to 70 percent from 53 percent in the 2013 second quarter.  We continue to work on improvements in fleet utilization and made significant progress in deploying our rig fleet into markets with potential for sustainable, profitable activity.

"Our U.S. Rental Tools business increased its gross margin percentage despite a decline in revenues, compared with the prior quarter.  The business benefitted from its growing presence in the U.S. Gulf of Mexico offshore drilling market while it continued to manage the challenges of the soft U.S. land drilling market, balancing long-term customer retention and competitive pricing.  

"In response to a typical storm season-related slowdown in barge drilling demand, our Gulf of Mexico barge drilling business conducted dry dock overhaul and maintenance work on three barge drilling rigs during the third quarter, preparing them for sustained work in this durable market.

"Our results also demonstrate the progress we made in the past year becoming a more focused and effective business operation.  We achieved important benefits from our rental tools business due to the acquisition of ITS, from our U.S. Barge Drilling segment with higher average dayrates, from our U.S drilling operations with the successful start-up of our new arctic-class rigs, and from increased international drilling utilization as we redeployed and reengaged much of our rig fleet," Mr. Rich added.

Third Quarter Highlights

  • Rig fleet utilization for International Drilling increased as a result of recent success in contracting previously idle rigs, including two each in Kazakhstan and the Kurdistan Region of Iraq; and one each in Indonesia and Sakhalin, Russia.
  • U.S. rental tools' revenues from the U.S. Gulf of Mexico offshore drilling market increased 14 percent from the prior quarter as a result of the growing demand in this expanding market.
  • ITS gross margin as a percentage of revenues increased to 23.3 percent, from 21.4 percent in the 2013 second quarter as it gained momentum in key commercial markets following the acquisition in April.
  • The integration of ITS has been substantially completed, including extensive compliance reviews and post-acquisition assimilation, at a cost of $4.8 million in the 2013 third quarter. We expect a smaller amount of further costs as we finish these activities.
  • In July, we issued $225 million of 7.5% Senior Notes, due in 2020, primarily to refinance the term loan that enabled the ITS acquisition. The refinancing provided a lower borrowing rate and staggered our debt maturities.

Outlook

"We are encouraged by recent forecasts of long term economic and industry trends, supporting demand growth in some of our key markets and the need for the innovative, reliable and efficient products and services we provide.  In the more immediate future, we expect our rental tools segment to benefit from further growth of its international operations and its expanded presence in the growing Gulf of Mexico offshore drilling market.  This may be tempered by effects of continued softness in U.S. land drilling markets.  We expect drilling demand in the Gulf of Mexico's inland waters to improve from current levels and support solid results from our barge drilling business.  Our success in securing continued work for our international rig fleet will determine our ability to maintain and build on the contributions from this business.  We expect tender activity and contract renewals to provide ample opportunities to recontract rigs as they come to term, as well as further strengthen our international drilling rig fleet utilization. 

"We continue to make progress in strengthening our business and ability to meet the needs of our customers. We see many opportunities ahead and remain focused on delivering reliable performance and value to our stakeholders," Mr. Rich concluded.

Third Quarter Review

Parker Drilling's revenues for the 2013 third quarter, compared with the 2013 second quarter, increased 5 percent to $237.8 million from $226.0 million, segment gross margin increased to $84.0 million from $82.5 million and segment gross margin as a percentage of revenues declined to 35.3 percent from 36.5 percent. (Segment gross margin excludes depreciation and amortization expense).

  • Rental Tools segment revenues were $89.6 million, segment gross margin was $40.9 million and segment gross margin as a percentage of revenues was 45.6 percent.  Compared with the 2013 second quarter, revenues increased 9 percent, segment gross margin increased 7 percent, and segment gross margin as a percentage of revenues declined.  Segment results reflect the impact of the April 2013 acquisition of ITS.  This led to an increase in revenues and segment gross margin and a decline in segment gross margin as a percentage of revenues, compared to the 2013 second quarter.  The U.S. rental tools business achieved an increase in gross margin as a percentage of revenues despite a moderate decline in revenues as the effects of growth in the expanding Gulf of Mexico offshore drilling market counterbalanced the impact of continued softness in the U.S. land drilling market.  International rental tools achieved an increase in revenues, gross margin and gross margin as a percentage of revenues as the ITS business gained momentum in key commercial markets following the acquisition in April.    
  • U.S. Barge Drilling segment revenues were $33.9 million, segment gross margin was $15.8 million, and segment gross margin as a percentage of revenues was 46.6 percent. Compared with the 2013 second quarter, revenues declined 11 percent, segment gross margin decreased 21 percent, and segment gross margin as a percentage of revenues declined. Anticipating lower utilization as the Gulf of Mexico's storm season advanced into its historically more intense period, we scheduled three barge rigs for maintenance and dry dock work during the 2013 third quarter. As a result, average rig fleet utilization was 88 percent, less than the prior period's 100 percent level.
  • U.S. Drilling segment revenues were $18.7 million, segment gross margin was $3.9 million and segment gross margin as a percentage of revenues was 20.9 percent. Compared with the 2013 second quarter, revenues increased 4 percent, segment gross margin increased 7 percent, and segment gross margin as a percentage of revenues increased. The segment recorded its second quarter of full operation for the two arctic-class drilling rigs in Alaska and the O&M contract in California and continues to deliver results consistent with the growing operating experience and performance record of these assets.
  • International Drilling segment revenues were $88.6 million, segment gross margin was $23.2 million, and segment gross margin as a percentage of revenues was 26.3 percent. Compared with the 2013 second quarter, revenues increased 6 percent, segment gross margin increased 14 percent and segment gross margin as a percentage of revenues increased. During the 2013 third quarter, international rig fleet utilization rose as a result of successes in contracting previously idle rigs into targeted growth markets. Commencing work under these new contracts was the primary contributor to the increase in revenues and gross margin.
  • Technical Services segment revenues were $7.0 million and segment gross margin was $0.2 million. Compared with the 2013 second quarter, both revenues and segment gross margin rose, the result of an increase in project-related activity.

The decline in general and administrative expense, to $14.2 million for the 2013 third quarter, from $22.4 million for the prior quarter, was primarily due to the reduction in expenses associated with the acquisition and integration of ITS.  Debt extinguishment expense associated with a July debt refinancing and related higher interest expense due to increased borrowings reduced pre-tax income by approximately $7.0 million. Capital expenditures were $39.3 million for the 2013 third quarter, and $102.9 million for the first nine months of the year. 

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. Central time (11:00 a.m. Eastern time) on Wednesday, November 6, 2013, to review reported results.  The call will be available by telephone at (480) 629-9818.  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 November 6 through November 13 at (303) 590-3030, using the access code 4645655#.

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 rig utilization and dayrates; 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; capital expenditures; expansion and growth opportunities; acquisitions or joint ventures; asset sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs for operation; the strengthening of the Company's financial position; increases in market share; outcomes of legal proceedings and investigations; 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 that could adversely affect market conditions, fluctuations in oil and natural gas prices that could reduce the demand for drilling services, changes in laws or government regulations that could adversely affect the cost of doing business, our ability to refinance our debt and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the Securities and Exchange Commission. See "Risk Factors" in the Company's Annual Report filed on Form 10-K 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 rental tools and contract drilling services to the energy industry. 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.  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. 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)







September 30, 2013


December 31, 2012


(Unaudited)



ASSETS




CURRENT ASSETS




Cash and Cash Equivalents

$                 162,457


$                  87,886

Accounts and Notes Receivable, Net

249,623


168,562

Rig Materials and Supplies

40,202


28,860

Deferred Costs

13,583


1,089

Deferred Income Taxes

13,473


8,742

Assets held for sale

7,485


6,800

Other Current Assets

39,339


46,345

     TOTAL CURRENT ASSETS

526,162


348,284





PROPERTY, PLANT AND EQUIPMENT, NET

858,672


789,123





OTHER ASSETS




Deferred Income Taxes

107,763


95,295

Other Assets

42,783


23,031

        TOTAL OTHER ASSETS

150,546


118,326





TOTAL ASSETS

$              1,535,380


$             1,255,733





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES




Current  Portion of Long-Term Debt

$                           -


$                  10,000

Accounts Payable and Accrued Liabilities

198,490


141,866

     TOTAL CURRENT LIABILITIES

198,490


151,866





LONG-TERM DEBT

653,968


469,205





LONG-TERM DEFERRED TAX LIABILITY

39,084


20,847





OTHER LONG-TERM LIABILITIES

24,048


23,182





TOTAL CONTROLLING INTEREST IN STOCKHOLDERS' EQUITY

617,969


591,404

Noncontrolling interest

1,821


(771)

TOTAL EQUITY

619,790


590,633





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$              1,535,380


$             1,255,733









Current Ratio

2.65


2.32





Total Debt as a  Percent of Capitalization

51%


45%





Book Value Per Common Share

$                       5.13


$                      4.97

 

PARKER DRILLING COMPANY

Consolidated Statement Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)












Three Months Ended June 30,


Three Months Ended September 30,



2013


2012


2013







REVENUES:

$      237,762


$      165,301


$          226,001







EXPENSES:






Operating Expenses

153,741


101,484


143,549

Depreciation and Amortization

35,882


29,779


32,280


189,623


131,263


175,829

TOTAL OPERATING GROSS MARGIN

48,139


34,038


50,172







General and Administrative Expense

(14,188)


(8,905)


(22,378)

Gain on Disposition of Assets, Net

1,094


606


517







TOTAL OPERATING INCOME 

35,045


25,739


28,311







OTHER INCOME AND (EXPENSE):






Interest Expense

(13,127)


(8,171)


(10,741)

Interest Income

130


30


2,203

Loss on extinguishment of debt

(5,218)


(117)


-

Change in fair value of derivative positions

-


19


17

Other 

400


26


(183)

TOTAL OTHER EXPENSE

(17,815)


(8,213)


(8,704)







INCOME (LOSS) BEFORE INCOME TAXES

17,230


17,526


19,607

INCOME TAX EXPENSE (BENEFIT)

9,112


6,695


11,233







NET INCOME (LOSS)

8,118


10,831


8,374

Less: net income (loss) attributable to noncontrolling interest

148


(105)


93

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$          7,970


$        10,936


$              8,281













EARNINGS  PER SHARE - BASIC 






Net Income (loss)

$            0.07


$            0.09


$                0.07







EARNINGS PER SHARE - DILUTED






Net Income (loss)

$            0.07


$            0.09


$                0.07







NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE






Basic 

119,990,196


118,109,214


119,483,780

Diluted

121,674,591


119,201,019


121,860,011

 

PARKER DRILLING COMPANY

Consolidated Statement Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)






Nine Months Ended September 30,


2013


2012





REVENUES:

$      630,918


$      520,795





EXPENSES:




Operating Expenses

414,336


300,942

Depreciation and Amortization

97,674


85,357


512,010


386,299

TOTAL OPERATING GROSS MARGIN

118,908


134,496





General and Administrative Expense

(49,449)


(21,822)

Gain on Disposition of Assets, Net

2,759


2,466





TOTAL OPERATING INCOME 

72,218


115,140





OTHER INCOME AND (EXPENSE):




Interest Expense

(33,874)


(25,133)

Interest Income

2,392


109

Loss on extinguishment of debt

(5,218)


(1,766)

Change in fair value of derivative positions

54


8

Other 

333


62

TOTAL OTHER EXPENSE

(36,313)


(26,720)





INCOME (LOSS) BEFORE INCOME TAXES

35,905


88,420





INCOME TAX EXPENSE (BENEFIT)

18,841


31,155





NET INCOME (LOSS)

17,064


57,265





Less: net income (loss) attributable to noncontrolling interest

221


(146)

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$        16,843


$        57,411









EARNINGS  PER SHARE - BASIC 

$            0.14


$            0.49





EARNINGS PER SHARE - DILUTED

$            0.14


$            0.48





NUMBER OF COMMON SHARES USED IN COMPUTING 








EARNINGS PER SHARE:




Basic 

119,443,260


117,458,365

Diluted

121,693,782


118,810,195

 

PARKER DRILLING COMPANY

Selected Financial Data

(Dollars in Thousands)

(Unaudited)




























Three Months Ended


Nine Months Ended September 30,




September 30,


June 30,






2013


2012


2013


2013


2012











REVENUES:










Rental Tools


$           89,614


$   59,947


$   82,022


$ 228,718


$ 191,233


U.S. Barge Drilling


33,919


33,142


38,301


102,085


94,269


U.S. Drilling


18,693


-


17,910


48,238


-


International Drilling


88,562


68,503


83,182


236,394


224,176


Technical Services


6,974


3,709


4,586


15,483


11,117


  Total Revenues


237,762


165,301


226,001


630,918


520,795













OPERATING EXPENSES:












Rental Tools


48,739


21,879


43,675


117,289


66,061


U.S. Barge Drilling


18,112


17,257


18,290


53,844


53,188


U.S. Drilling


14,786


2,641


14,270


40,364


3,639


International Drilling


65,314


55,919


62,855


188,023


166,847


Technical Services


6,790


3,788


4,459


14,816


11,207


  Total Operating Expenses


153,741


101,484


143,549


414,336


300,942













OPERATING GROSS MARGIN:












Rental Tools


40,875


38,068


38,347


111,429


125,172


U.S. Barge Drilling


15,807


15,885


20,011


48,241


41,081


U.S. Drilling


3,907


(2,641)


3,640


7,874


(3,639)


International Drilling


23,248


12,584


20,327


48,371


57,329


Technical Services


184


(79)


127


667


(90)


Depreciation and Amortization 


(35,882)


(29,779)


(32,280)


(97,674)


(85,357)


  Total Operating Gross Margin 


48,139


34,038


50,172


118,908


134,496

 

PARKER DRILLING COMPANY

Adjusted EBITDA 

(Dollars in Thousands)

























Three Months Ended



September 30, 2013


June 30, 2013


March 31, 2013


December 31, 2012


September 30, 2012












Net Income (Loss) Attributable to Controlling Interest


$                   7,970


$         8,281


$               592


$              (20,098)


$                 10,936

  Adjustments:











Income Tax (Benefit) Expense


9,112


11,233


(1,504)


2,724


6,695

Interest Expense


13,127


10,741


10,006


8,409


8,171

Other Income and Expense


4,688


(2,037)


(212)


717


42

Gain on Disposition of Assets, Net


(1,094)


(517)


(1,148)


492


(606)

Depreciation and Amortization


35,882


32,280


29,512


27,660


29,779












Adjusted EBITDA


69,685


59,981


37,246


19,904


55,017












Adjustments:











     Non-routine Items


4,819


11,390


3,463


15,921


564












Adjusted EBITDA after Non-routine Items


$                 74,504


$       71,371


$          40,709


$                35,825


$                 55,581

SOURCE Parker Drilling Company



RELATED LINKS
http://www.parkerdrilling.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.