Parker Drilling Reports 2014 Third Quarter Results

HOUSTON, Nov. 5, 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 September 30, 2014, including net income of $12.6 million, or $0.10 per diluted share, on revenues of $242.0 million.  Excluding non-routine items, the Company earned net income of $11.8 million or $0.10 per diluted share, compared with similarly adjusted 2014 second quarter net income of $15.1 million or $0.12 per diluted share, on revenues of $254.2 million.  Third quarter adjusted EBITDA, excluding non-routine expenses, was $70.3 million, compared with $71.0 million for the preceding quarter.

"Our third quarter results were in line with our expectations and reflect a solid performance from our operations.  We achieved a sequential increase in gross margin and gross margin as a percentage of revenues, although revenues declined due to anticipated reductions in Technical Services project revenues, reimbursable expenses and the Latin America region's rig fleet utilization," said Gary Rich, chairman, president and chief executive officer.

"We continue to make gains in growing and strengthening our business. Recently, we committed one of two rigs currently stationed in Tunisia for work in the Caspian / Middle East market. The commitment also includes further work for one of our two rigs in the Kurdistan Region of Iraq.  In addition, we secured a new operations and maintenance contract to provide extended reach drilling services for two customer-owned rigs in the Arabian Gulf.

Outlook

"We believe the recent decline in the price of crude oil is beginning to influence drilling activity in U.S. markets. This could lead to lower than previously expected fourth quarter revenues and earnings from our U.S. operations.  However, our international businesses operate in markets where drilling activity is less volatile.  As a result, our near-term expectations for our international businesses are largely unchanged.

"As current market concerns resolve themselves, we expect the long-term needs of the industry to generate growth in demand for the services we provide.  We believe this will produce opportunities to further grow our businesses, enhance our operating performance and deliver strong financial results," Mr. Rich added.

Third Quarter Review

Parker Drilling's revenues for the 2014 third quarter, compared with the 2014 second quarter, decreased 4.8 percent to $242.0 million from $254.2 million, operating gross margin excluding depreciation and amortization expense (segment gross margin) increased to $81.2 million from $79.7 million and segment gross margin as a percentage of revenues was 33.6 percent, compared with 31.3 percent for the prior period.

For the Company's combined drilling operations, revenues declined 8 percent to $154.3 million from $167.1 million, gross margin declined 2 percent to $45.5 million from $46.3 million, and drilling operations' gross margin as a percentage of revenues was 29.5 percent, compared with 27.7 percent. The decrease in revenues was primarily due to the anticipated reduction in Technical Services project revenues, lower reimbursable expenses and lower Latin America rig fleet utilization.  This was largely offset by higher average dayrates and lower operating costs.

• U.S. Barge Drilling revenues were $39.6 million, gross margin was $20.7 million, and gross margin as a percentage of revenues was 52.2 percent.  Compared with the 2014 second quarter, revenues declined 2 percent and gross margin declined 4 percent.  The declines in revenues and gross margin were primarily the result of lower utilization, partially offset by an increase in realized average dayrate. 
• U.S. Drilling revenues were $19.7 million, gross margin was $5.3 million, and gross margin as a percentage of revenues was 26.9 percent. Compared with the 2014 second quarter, revenues declined 2 percent due to a reduction in reimbursable expenses.  Gross margin increased 6 percent, primarily reflecting growing efficiencies in our Alaska operations.
• International Drilling revenues were $88.2 million, gross margin was $18.5 million, and gross margin as a percentage of revenues was 20.9 percent. Compared with the 2014 second quarter, revenues declined 4 percent and gross margin declined 2 percent. The decrease in revenues was primarily due to the anticipated decline in reimbursable expenses and the expected reduction in our Latin America rig fleet utilization.  This was partially offset by a higher realized average dayrate.  Lower operating expenses, primarily in our operations in the Kurdistan Region of Iraq, kept gross margin relatively unchanged.
• Technical Services revenues were $6.8 million, gross margin was $1.0 million, and gross margin as a percentage of revenues was 15.4 percent.  Compared with the 2014 second quarter, revenues decreased 55 percent due to the expected reduction in vendor services associated with customer projects.  Vendor services revenues make little contribution to gross margin.  As a result, gross margin was relatively unchanged.

Rental Tools revenues were $87.7 million, gross margin was $35.7 million, and gross margin as a percentage of revenues was 40.7 percent. Compared with the 2014 second quarter, revenues increased 1 percent and gross margin increased 7 percent. The increases in revenues and gross margin were primarily due to growth in U.S. Gulf of Mexico offshore deepwater activity and lower operating costs in our international operations.  These benefits were partially offset by reduced activity in the U.S. Gulf of Mexico shelf and inland waters markets.

General and Administrative Expense increased to $9.4 million for the 2014 third quarter, from $7.0 million for the 2014 second quarter.  Both periods benefited from the receipt of funds from an escrow account established in connection with the ITS acquisition.  Excluding this benefit, General and Administrative Expense was $10.6 million in the 2014 third quarter and $8.5 million in the 2014 second quarter.  The increased expense was primarily due to higher professional fees for corporate services.

Capital expenditures year-to-date through September 30, 2014 were $151.1 million. 

"Our attention remains focused on developing strong, durable and competitive operations capable of providing customers with innovative, reliable and efficient business solutions.  We believe our success in this will produce sustainable and profitable results, attractive returns and growth for Parker Drilling," concluded Mr. Rich.

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, November 6, 2014, to review reported results.  The call will be available by telephone at (719) 325-2454.  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, 2014 through November 13, 2014 at (888) 203-1112, using the access code 9060888#.

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 Drilling's barge rig fleet and in select international markets and harsh-environment regions utilizing Parker Drilling-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.

SOURCE Parker Drilling Company