PARKER DRILLING COMPANY HOUSTON, Feb. 18, 2015 /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 December 31, 2014, including net income of $7.8 million, or $0.06 per diluted share, on revenues of $243.2 million. Fourth quarter adjusted EBITDA was $65.2 million.
"In the fourth quarter we delivered solid results in a challenging environment. The growing impact of declining oil prices on our business serving the U.S. Gulf of Mexico shallow and inland waters drilling market was counterbalanced by stronger performance elsewhere, including revenue gains in international markets," said Gary Rich, chairman, president and chief executive officer. "We also increased the number of international rigs under contract and secured an additional Operations and Maintenance (O&M) contract. These new contracts should begin making contributions in the 2015 first quarter. In addition, we took actions to address reduced market demand for our U.S. barge drilling and rental tools businesses and began to prepare the company for the more challenging conditions we expect in 2015," Mr. Rich added.
2014 Summary
Results for the year ended December 31, 2014 included net income of $23.5 million, or $0.19 per diluted share, on revenues of $968.7 million. Included in 2014 results are non-routine items of $16.4 million, after tax, primarily related to debt extinguishment expense and the 2013 acquisition of ITS. Excluding these non-routine items, the Company earned net income of $39.9 million, or $0.32 per diluted share. Adjusted EBITDA, excluding non-routine items, was $260.5 million.
"We made good progress in 2014, strengthening our market position, investing in growth, and enhancing our ability to provide innovative, reliable and efficient solutions to customers," said Mr. Rich. "Our U.S. rental tools business achieved significant growth in the U.S. land and Gulf of Mexico deepwater drilling markets. Our international rental tools business managed through disruptions in several key markets during the year, yet ended 2014 with the highest quarterly revenues and gross margins of the period. In addition, we continued to raise the operational and financial performance of our Arctic-class Alaska drilling rigs.
"Average utilization of our international drilling fleet rose to 70 percent for 2014 from 60 percent for the prior year and we ended the year with eighteen of our twenty-two rigs under contract. We completed our first full year of operation in the Kurdistan Region of Iraq and added two new projects to our O&M portfolio. During the year, we reduced our debt by approximately $39 million and refinanced $360 million of debt at lower interest rates and with extended maturities. In January 2015, we amended our revolving credit facility, expanding it to $200 million and extending its maturity to 2020, providing greater liquidity and financial flexibility. As a result of the progress we made in 2014 we are in a strong operating position and solid financial condition as we head into this industry downcycle."
Outlook
"It is clear that 2015 will be a challenging year. The steep and rapid decline in oil prices has led to a sharp reduction in drilling activity in U.S. land and Gulf of Mexico inland and shallow water markets. This also is putting increased pressure on prices for our services. We anticipate the downturn in our U.S. markets will be severe and expect our international markets to be impacted as well, though with less severity. We are taking actions across the company to lower our cost base, sustain our utilization, manage our cash and liquidity, and preserve our ability to respond as opportunities develop.
Fourth Quarter Review
Parker Drilling's 2014 fourth quarter revenues of $243.2 million were approximately the same as 2014 third quarter revenues of $242.0 million. The Company's operating gross margin excluding depreciation and amortization expense (gross margin) decreased to $75.2 million for the 2014 fourth quarter from $81.2 million for the prior period, and gross margin as a percentage of revenues was 30.9 percent, compared with 33.6 percent for the 2014 third quarter.
For the Company's combined drilling operations, revenues were $150.8 million, gross margin was $35.9 million, and gross margin as a percentage of revenues was 23.8 percent. Compared with the 2014 third quarter, revenues declined 2 percent and gross margin declined 21 percent. Revenues from reimbursable expenses, which have a minimal impact on gross margin, increased by $5.8 million. Excluding reimbursables, revenues declined 7 percent, gross margin declined 21 percent, and gross margin as a percentage of revenues declined to 28.6 percent from 33.7 percent. The decrease in operating revenues and gross margin is primarily due to the impact of the rapid decline in oil prices on the U.S. Barge Drilling business. Revenue gains and improved operating performance in drilling operations outside of the U.S. Gulf of Mexico offset some of that impact.
-- U.S. Barge Drilling revenues were $26.7 million, gross margin was $9.7
million, and gross margin as a percentage of revenues was 36.3 percent.
Compared with the 2014 third quarter, revenues declined 33 percent and
gross margin declined 53 percent. The declines in revenues and gross
margin reflect the impact of the steep decline in oil prices. This led
to lower rig fleet utilization and a decline in realized average
dayrates.
-- U.S. Drilling revenues were $20.8 million, gross margin was $6.4 million
and gross margin as a percentage of revenues was 30.8 percent. Compared
with the 2014 third quarter, revenues increased 6 percent and gross
margin increased 21 percent, primarily due to higher realized average
dayrates and lower operating costs.
-- International Drilling revenues were $95.2 million, gross margin was
$19.0 million, and gross margin as a percentage of revenues was 19.9
percent. Compared with the 2014 third quarter, revenues increased 8
percent and gross margin increased 3 percent. Excluding reimbursables,
revenues increased 2 percent, gross margin increased 3 percent, and
gross margin as a percentage of revenues increased to 26.2 percent from
26.0 percent. The increase in operating revenues and gross margin is
primarily due to the start-up of Rig 216 in Kazakhstan during the 2014
fourth quarter.
-- Technical Services revenues were $8.1 million, gross margin was $0.8
million, and gross margin as a percentage of revenues was 10.1 percent.
Revenues increased $1.3 million and gross margin declined $0.2 million,
reflecting shifts in work requirements as projects develop.
Rental Tools revenues were $92.4 million, gross margin was $39.3 million and gross margin as a percentage of revenues was 42.6 percent. Compared with the 2014 third quarter, revenues increased 5 percent and gross margin increased 10 percent. The increases in revenues and gross margin were primarily due to growth in U.S. Gulf of Mexico offshore deepwater activity and key international markets. This was partially offset by increased handling costs for inbound tools as business slowed in the U.S. Gulf of Mexico shelf and inland waters markets, and, late in the quarter, in the U.S. land drilling market.
General and Administrative Expense were $9.7 million for the 2014 fourth quarter, compared with $9.4 million for the 2014 third quarter. Capital expenditures for 2014 were $176.8 million.
"We believe we are in sound condition, prepared to meet the challenges ahead and capture opportunities that arise. We will continue to push forward on our strategic objectives and on strengthening our core competencies to enhance our ability to serve customers and produce value for the company," 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, February 19, 2015, to review reported results. The call will be available by telephone at (888) 510-1786. 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 February 19, 2015 through February 26, 2015 at (719) 457-0820, using the access code 5031371#.
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 reasonable, 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.
PARKER DRILLING COMPANY
Consolidated Condensed Balance Sheets
(Dollars in Thousands, Except Per Share Data)
December 31, 2014 December 31, 2013
----------------- -----------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $108,456 $148,689
Accounts and Notes Receivable,
Net 270,952 257,889
Rig Materials and Supplies 47,943 41,781
Deferred Costs 5,673 13,682
Deferred Income Taxes 7,476 9,940
Other Current Assets 29,279 47,302
TOTAL CURRENT ASSETS 469,779 519,283
------- -------
PROPERTY, PLANT AND EQUIPMENT,
NET 895,940 871,356
OTHER ASSETS
Deferred Income Taxes 122,689 102,420
Other Assets 32,251 41,697
TOTAL OTHER ASSETS 154,940 144,117
------- -------
TOTAL ASSETS $1,520,659 $1,534,756
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term
Debt $10,000 $25,000
Accounts Payable and Accrued
Liabilities 168,665 182,152
TOTAL CURRENT LIABILITIES 178,665 207,152
------- -------
LONG-TERM DEBT 605,000 628,781
LONG-TERM DEFERRED TAX LIABILITY 52,115 38,767
OTHER LONG-TERM LIABILITIES 18,665 26,914
TOTAL CONTROLLING INTEREST IN
STOCKHOLDERS' EQUITY 662,431 631,696
Noncontrolling interest 3,783 1,446
-----
TOTAL EQUITY 666,214 633,142
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,520,659 $1,534,756
========== ==========
Current Ratio 2.63 2.51
Total Debt as a Percent of
Capitalization 48% 51%
Book Value Per Common Share $5.43 $5.24
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months
Ended September
30,
----------------
Three Months Ended December 31,
-------------------------------
2014 2013 2014
---- ---- ----
REVENUES $243,213 $243,321 $242,012
EXPENSES:
Operating Expenses 167,990 158,380 160,797
Depreciation and
Amortization 38,455 36,378 36,149
206,445 194,758 196,946
------- ------- -------
TOTAL OPERATING GROSS
MARGIN 36,768 48,563 45,066
------ ------ ------
General and
Administrative Expense (9,675) (18,738) (9,370)
Provision for Reduction
in Carrying Value of
Certain Assets - (2,544) -
Gain (Loss) on
Disposition of Assets,
Net 621 1,234 (457)
---
TOTAL OPERATING INCOME 27,714 28,515 35,239
------ ------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (10,779) (13,946) (10,848)
Interest Income 39 58 36
Other 1,148 2,255 (536)
TOTAL OTHER EXPENSE (9,592) (11,633) (11,348)
------ ------- -------
INCOME BEFORE INCOME
TAXES 18,122 16,882 23,891
INCOME TAX EXPENSE 9,983 6,766 11,014
----- ----- ------
NET INCOME 8,139 10,116 12,877
Less: net income (loss)
attributable to
noncontrolling interest 386 (58) 311
NET INCOME ATTRIBUTABLE
TO CONTROLLING INTEREST $7,753 $10,174 $12,566
====== ======= =======
EARNINGS PER SHARE - BASIC
Net Income $0.06 $0.08 $0.10
EARNINGS PER SHARE -
DILUTED $0.06 $0.08 $0.10
Net Income
NUMBER OF COMMON SHARES USED IN COMPUTING
EARNINGS PER SHARE
Basic 121,755,421 119,930,516 121,523,674
Diluted 123,295,412 121,608,427 123,177,753
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Year Ended December 31,
-----------------------
2014 2013 2012
---- ---- ----
REVENUES $968,684 $874,172 $677,761
EXPENSES:
Operating Expenses 669,381 571,672 413,188
Depreciation and
Amortization 145,121 134,053 113,017
814,502 705,725 526,205
------- ------- -------
TOTAL OPERATING GROSS
MARGIN 154,182 168,447 151,556
------- ------- -------
General and
Administrative Expense (35,016) (68,025) (46,257)
Provision for Reduction
in Carrying Value of
Certain Assets - (2,544) -
Gain on Disposition of
Assets, Net 1,054 3,994 1,974
TOTAL OPERATING INCOME 120,220 101,872 107,273
------- ------- -------
OTHER INCOME AND (EXPENSE):
Interest Expense (44,265) (47,820) (33,542)
Interest Income 195 2,450 153
Loss on extinguishment
of debt (30,152) (5,218) (2,130)
Change in fair value of
derivative positions - 53 55
Other 2,539 1,450 (832)
TOTAL OTHER EXPENSE (71,683) (49,085) (36,296)
INCOME BEFORE INCOME
TAXES 48,537 52,787 70,977
------ ------ ------
INCOME TAX EXPENSE 24,076 25,608 33,879
------ ------ ------
NET INCOME 24,461 27,179 37,098
Less: net income (loss)
attributable to
noncontrolling
interest 1,010 164 (215)
NET INCOME ATTRIBUTABLE
TO CONTROLLING
INTEREST $23,451 $27,015 $37,313
======= ======= =======
EARNINGS PER SHARE -
BASIC $0.19 $0.23 $0.32
EARNINGS PER SHARE -
DILUTED $0.19 $0.22 $0.31
NUMBER OF COMMON SHARES USED IN
COMPUTING
EARNINGS PER SHARE:
Basic 121,186,464 119,284,468 117,721,135
Diluted 123,076,648 121,224,550 119,093,590
PARKER DRILLING COMPANY
Selected Financial Data
(Dollars in Thousands)
(Unaudited)
Three Months Ended Year Ended December 31,
------------------ -----------------------
December 31, September 30,
------------
2014 2013 2014 2014 2013 2012
---- ---- ---- ---- ---- ----
REVENUES:
Rental Tools $92,378 $81,324 $87,711 $347,766 $310,041 $246,900
U.S. Barge Drilling 26,705 34,770 39,630 137,113 136,855 123,672
U.S. Drilling 20,841 18,690 19,687 79,984 66,928 1,387
International Drilling 95,193 97,568 88,173 360,588 333,962 291,772
Technical Services 8,096 10,969 6,811 43,233 26,386 14,030
Construction Contract - - - - - -
---
Total Revenues $243,213 $243,321 $242,012 $968,684 $874,172 $677,761
---
OPERATING EXPENSES:
Rental Tools $53,058 $45,736 $51,987 $210,643 $163,024 $88,884
U.S. Barge Drilling 17,000 17,416 18,939 73,354 71,260 69,572
U.S. Drilling 14,422 14,663 14,395 57,716 55,027 9,538
International Drilling 76,235 75,904 69,713 287,971 262,884 231,280
Technical Services 7,275 9,389 5,763 39,697 24,205 13,914
Construction Contract - (4,728) - - (4,728) -
Total Operating Expenses $167,990 $158,380 $160,797 $669,381 $571,672 $413,188
---
OPERATING GROSS MARGIN:
Rental Tools $39,320 $35,588 $35,724 $137,123 $147,017 $158,016
U.S. Barge Drilling 9,705 17,354 20,691 63,759 65,595 54,100
U.S. Drilling 6,419 4,027 5,292 22,268 11,901 (8,151)
International Drilling 18,958 21,664 18,460 72,617 71,078 60,492
Technical Services 821 1,580 1,048 3,536 2,181 116
Construction Contract - 4,728 - - 4,728 -
Depreciation and Amortization (38,455) (36,378) (36,149) (145,121) (134,053) (113,017)
--------
Total Operating Gross Margin $36,768 $48,563 $45,066 $154,182 $168,447 $151,556
---
PARKER DRILLING COMPANY
Adjusted EBITDA
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
December 31, September 30, June 30, 2014 March 31, December 31,
2014 2014 2014 2013
------------- ------------- ------------- ---------- -------------
Net Income (Loss)
Attributable to
Controlling Interest $7,753 $12,566 $15,681 $(12,549) $10,172
Adjustments:
Income Tax (Benefit)
Expense 9,983 11,014 11,702 (8,623) 6,766
Interest Expense 10,779 10,848 10,599 12,039 13,946
Other Income and Expense (1,187) 500 (641) 28,746 (2,313)
(Gain) Loss on
Disposition of Assets,
Net (621) 457 (1,019) 129 (1,234)
Depreciation and
Amortization 38,455 36,149 36,180 34,337 36,378
Provision for Reduction
in Carrying Value of
Certain Assets - - - - 2,544
--- --- --- -----
Adjusted EBITDA* 65,162 71,534 72,502 54,079 66,259
====== ====== ====== ====== ======
Adjustments:
Non-routine Items - (1,250) (1,500) - 3,306
--- ------ ------ -----
Adjusted EBITDA after
Non-routine Items $65,162 $70,284 $71,002 $54,079 $69,565
======= ======= ======= ======= =======
*Adjusted EBITDA, a non-GAAP
financial measure, excludes items
that management believes are of a
non-routine nature and which
detract from an understanding of
normal operating performance and
comparisons with other periods.
Management also believes that
results excluding these items are
more comparable to estimates
provided by securities analysts
and used by them in evaluating the
Company's performance.
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SOURCE Parker Drilling Company
