Parker Drilling Reports 2015 Third Quarter Results

HOUSTON, Nov. 3, 2015 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced a net loss of $48.6 million, or a $0.40 loss per share on revenues of $173.4 million for the third quarter ended September 30, 2015. The net loss includes a $36.6 million non-cash valuation allowance taken primarily against U.S. foreign tax credits and certain foreign net operating losses that accounted for $0.30 of the reported loss per share. While the carry-forwards have been reserved on the Company's financial statements, they have not expired and remain available to offset future cash taxes. Excluding this valuation allowance, the adjusted loss per share was $0.10.

Third quarter adjusted EBITDA was $35.4 million, compared with $32.8 million for the preceding quarter.

Gary Rich, Chairman, President and CEO, said, "Both our adjusted EBITDA and our adjusted EBITDA as a percentage of revenue increased sequentially primarily due to strong results from our International & Alaska Drilling segment. In addition, we continued to benefit from company-wide cost efficiencies undertaken during the course of the year.

"From an outlook perspective, we anticipate that continued uncertainty over commodity prices will lead to further declines in customer spending and pricing during the remainder of the year. As a result, we anticipate lower activity for our drilling services and rental tools services businesses, which will drive lower operating results in the fourth quarter.

"We continue to manage our business as if this downturn will persist through 2016. Throughout this year, we have taken proactive steps to achieve our goal of generating free cash flow, including head count and operating expense reductions, maintaining our working capital diligence and reducing capital expenditures while striving to sustain utilization and market share. In addition, previously-announced amendments to our credit facility preserve our financial flexibility and enhance our position in this uncertain market. I believe our balanced profile of product and service mix, geographic diversity and backlog are enabling us to perform better than most of our peers. With our solid balance sheet and prudent management during this downturn, we believe we are positioned to grow once the market environment stabilizes and the outlook improves," Mr. Rich concluded.

Third Quarter Review

Parker Drilling's revenues for the 2015 third quarter, compared with the 2015 second quarter, decreased 6.7 percent to $173.4 million from $185.9 million, operating gross margin excluding depreciation and amortization expense (gross margin) increased 5.0 percent to $44.4 million from $42.3 million and gross margin as a percentage of revenues was 25.6 percent, compared with 22.8 percent for the prior period.

Drilling Services

For the Company's Drilling Services business, which is comprised of the U.S. (Lower 48) Drilling and International & Alaska Drilling segments, revenues declined 4.3 percent to $116.6 million from $121.8 million, gross margin increased 31.4 percent to $27.2 million from $20.7 million, and gross margin as a percentage of revenues was 23.3 percent, compared with 17.0 percent for the prior period.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues were $6.0 million, an 11.8 percent decrease from 2015 second quarter revenues of $6.8 million. Gross margin was a $1.9 million loss as compared with a 2015 second quarter gross margin loss of $2.0 million. The declines in revenues were primarily the result of lower activity in the Company's California O&M business, while gross margin improved as a result of slightly higher utilization and lower costs in the Gulf of Mexico drilling barge business.

International & Alaska Drilling

International & Alaska Drilling segment revenues were $110.7 million, a 3.7 percent decrease from 2015 second quarter revenues of $115.0 million. Gross margin was $29.1 million, a 28.8 percent increase from 2015 second quarter gross margin of $22.6 million. Gross margin as a percentage of revenues was 26.3 percent as compared with 19.7 percent in the 2015 second quarter. The decrease in revenues is attributable to a $7.1 million decrease in reimbursable expenses and lower Eastern Hemisphere rig utilization, partially offset by an increase in Latin America utilization and project services activities. The increase in gross margin is due to the increase in Latin America utilization and project services activities along with lower operating expenses.

Rental Tools Services

Rental Tools segment revenues were $56.8 million, an 11.4 percent decrease from 2015 second quarter revenues of $64.1 million. Gross margin was $17.2 million, a 20.7 percent decrease from 2015 second quarter gross margin of $21.7 million. Gross margin as a percentage of revenues was 30.3 percent as compared with 33.9 percent in the 2015 second quarter. Reduced revenues and gross margin were primarily due to the continued decline in U.S. land drilling activity, as well as lower pricing and business mix in certain international rental tools markets.

General and Administrative expense decreased to $8.9 million for the 2015 third quarter, from $9.5 million for the 2015 second quarter.

Capital expenditures in third quarter were $17.9 million, and year-to-date through September 30, 2015 were $72.5 million.

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 4, 2015, to review reported results. The call will be available by telephone at (888) 287-5563, access code 235454. 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 or by telephone for 1 week from November 4, 2015 at (888) 203-1112, using the access code 235454#.

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 addressing activities, events or developments 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 purchases and sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs or rental equipment for operation; the Company's financial position; changes 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 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 provides drilling 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 U.S. and international markets and harsh-environment regions utilizing Parker Drilling-owned and customer-owned equipment. The Company's Rental Tools Services 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