Parker Drilling Reports 2016 First Quarter Results

HOUSTON, May 3, 2016 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the first quarter ended March 31, 2016, including a reported net loss of $95.8 million, or a $0.78 loss per share, on revenues of $130.5 million. 

The net loss includes a $73.1 million non-cash valuation allowance taken primarily against U.S. domestic deferred tax assets largely consisting of U.S. federal net operating losses.  The valuation allowance accounted for $0.60 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 net loss was $22.7 million, or an $0.18 loss per share.

First quarter adjusted EBITDA was $12.6 million, compared with $28.6 million for the preceding quarter.

"Operating results for the first quarter were generally in-line with our expectations," said Gary Rich, the Company's Chairman, President and CEO.  "Weak market conditions have continued to prevail as low commodity prices curtailed customer activity across multiple geographic markets.  We continue to maintain solid operational execution while prudently managing expenses to minimize the margin compression the downturn has caused across all of our business segments.

"During the quarter we extended the contracts for three of our drilling rigs in Kazakhstan that were scheduled to end mid-2016.  One of the contracts was extended to the end of 2016 and two were extended to the end of 2017.  Our balance sheet remains strong with a cash position of $108.4 million and an undrawn revolver.  Looking forward, our 2016 second quarter results are expected to be weaker than the first quarter as utilization and pricing continue to remain under pressure.  However, our cash management efforts and strong customer relationships should continue to position the Company for recovery and growth in the future," concluded Rich.

First Quarter Review

Parker Drilling's revenues for the 2016 first quarter, compared with the 2015 fourth quarter, decreased 12.2 percent to $130.5 million from $148.7 million, operating gross margin excluding depreciation and amortization expense (gross margin) decreased 34.7 percent to $22.4 million from $34.3 million and gross margin as a percentage of revenues was 17.2 percent, compared with 23.1 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 8.4 percent to $90.7 million from $99.0 million, gross margin decreased 23.9 percent to $15.6 million from $20.5 million, and gross margin as a percentage of revenues was 17.2 percent, compared with 20.7 percent for the prior period.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues were $2.1 million compared to $3.5 million in the 2015 fourth quarter. Gross margin was a $3.3 million loss as compared with a 2015 fourth quarter loss of $2.2 million. The declines in revenues and gross margin were primarily the result of lower utilization.

International & Alaska Drilling

International & Alaska Drilling segment revenues were $88.6 million, a 7.2 percent decrease from 2015 fourth quarter revenues of $95.5 million. Gross margin was $18.9 million, a 16.4 percent decrease from 2015 fourth quarter gross margin of $22.6 million. Gross margin as a percentage of revenues was 21.3 percent as compared with 23.7 percent in the 2015 fourth quarter. The decrease in revenues and gross margin were attributable to lower rig utilization and lower realized dayrates partially offset by higher project services activities.

Rental Tools Services

Rental Tools segment revenues were $39.8 million, a 20.1 percent decrease from 2015 fourth quarter revenues of $49.8 million. Gross margin was $6.8 million, a 50.7 percent decrease from 2015 fourth quarter gross margin of $13.8 million. Gross margin as a percentage of revenues was 17.1 percent as compared with 27.7 percent in the 2015 fourth quarter. Reduced revenues and gross margin were primarily due to the continued decline in both the U.S. offshore and land drilling activity, as well as lower activity in certain international markets.

Consolidated

General and Administrative expenses were $9.8 million for the 2016 first quarter, up from $6.9 million for the 2015 fourth quarter.  The increase in General and Administrative expenses was primarily due to reduced employee benefit expenses in the fourth quarter that did not recur, incentive plan adjustments, and higher professional fees.

Capital expenditures in the first quarter were $7.9 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, May 4, 2016, to review first quarter results.  The call will be available by telephone by dialing +1 (412) 902-0003 and asking for the Parker Drilling First Quarter Conference Call.  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 through May 11, 2016 at +1 (201) 612-7415, conference ID 13636201.

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 international markets and harsh-environment regions utilizing Parker-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.

CONTACT: Jason Geach, Vice President, Investor Relations & Corporate Development, +1 (281) 406-2310, [email protected].

SOURCE Parker Drilling Company