PARKER DRILLING COMPANY HOUSTON, Aug. 6, 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 June 30, 2014, including net income of $15.7 million, or $0.13 per diluted share, on revenues of $254.2 million. Excluding non-routine items, the Company earned net income of $15.1 million or $0.12 per diluted share, compared with similarly adjusted 2014 first quarter net income of $5.5 million or $0.04 per diluted share, on revenues of $229.2 million. Second quarter adjusted EBITDA, excluding non-routine items, was $71.0 million, compared with $54.1 million for the preceding quarter.
"Second quarter results were largely in line with our expectations," said Gary Rich, chairman, president and chief executive officer. "We had solid gains in revenues and earnings from both our drilling and rental tools operations.
"Our U.S. Barge Drilling segment had strong results in the second quarter, primarily due to higher utilization and dayrates. We recently made significant investments in this business which we believe will provide revenue and earnings growth and attractive returns for our shareholders. We completed the rebuild of Rig 55B and put it into service during the second quarter. Also during the second quarter, we acquired Rig 30B, a three-year old posted barge rig, at an attractive price. The rig has been inspected, crewed and is now at work. These rig additions give us more flexibility to meet customer needs.
"Our International Drilling segment continued to have good success in putting rigs to work. In the second quarter we put Rig 122 to work in Mexico and contracted Rig 216 to work in Kazakhstan later this year. Both rigs had been idle since 2010. In addition, we re-contracted our three 3,000-horsepower rigs in Mexico on four year terms at higher dayrates.
"Our rental tools business capitalized on improving conditions in the U.S. land market and achieved higher utilization and better pricing during the quarter, leading to increased revenues and profitability."
Outlook
"We continue to build a foundation from which to grow Parker Drilling and consistently produce solid operating performance and financial results," said Mr. Rich. "We expect continued improvement in market conditions in the U.S., on land and in the Gulf of Mexico. Our recent gains in rental tools utilization and pricing in the U.S. land drilling market are encouraging and position us to benefit from further market growth that may develop. In addition, we expect further expansion of our rental tools presence in the Gulf of Mexico offshore drilling market as committed contracts are initiated later this year. Recent additions to our Gulf of Mexico barge drilling fleet and strong dayrates should allow that operation to continue contributing to revenues and earnings growth into 2015.
"The international markets in which we work are expected to provide good demand to support growth of our rental tools business and strong tender activity and contract renewal opportunities for our rig fleet. However, conditions in several key international markets may delay our ability to benefit from these in the near-term.
"We continue to focus on consistent execution of our strategy and providing our customers with innovative, reliable and efficient solutions to their operational needs. We expect this focus, combined with increasing market demand, will provide additional opportunities to produce further growth and enhanced returns."
Second Quarter Review
Parker Drilling's revenues for the 2014 second quarter, compared with the 2014 first quarter, increased 11 percent to $254.2 million from $229.2 million, operating gross margin excluding depreciation and amortization expense (segment gross margin) increased 26 percent to $79.7 million from $63.2 million and segment gross margin as a percentage of revenues was 31.3 percent, compared with 27.6 percent for the prior period.
The Company's combined drilling operations achieved increases in revenues, gross margin and gross margin as a percentage of revenues for the 2014 second quarter, compared with 2014 first quarter results. Drilling operations' revenues increased 12 percent to $167.1 million from $148.7 million, gross margin increased 35 percent to $46.3 million from $34.4 million, and drilling operations' gross margin as a percentage of revenues was 27.7 percent, compared with 23.2 percent. Higher rig fleet utilization and increases in realized average dayrates were among the leading contributors to these results.
-- U.S. Barge Drilling segment revenues were $40.3 million, segment gross
margin was $21.5 million, and segment gross margin as a percentage of
revenues was 53.4 percent. Compared with the 2014 first quarter,
revenues increased 32 percent and segment gross margin increased 82
percent. The increases in revenues and segment gross margin were
primarily the result of higher utilization, an increase in average
dayrate, and the addition of Rig 55B.
-- U.S. Drilling segment revenues were $20.0 million, segment gross margin
was $5.0 million and segment gross margin as a percentage of revenues
was 24.9 percent. Compared with the 2014 first quarter, revenues
increased 3 percent and segment gross margin declined 10 percent.
Excluding the beneficial impact in the prior quarter of a reduction in
allowances for doubtful accounts, segment revenues, gross margin and
gross margin as a percentage of revenues all increased.
-- International Drilling segment revenues were $91.8 million, segment
gross margin was $18.8 million, and segment gross margin as a percentage
of revenues was 20.5 percent. Compared with the 2014 first quarter,
revenues increased 7 percent and segment gross margin increased 15
percent. The growth in revenues and segment gross margin reflects modest
increases in utilization and realized dayrates. Revenues rose further
due to an increase in reimbursables, and segment gross margin benefited
from lower operating expenses.
-- Technical Services segment revenues were $15.0 million, segment gross
margin was $1.0 million, and segment gross margin as a percentage of
revenues was 6.8 percent. Compared with the 2014 first quarter, revenues
increased 12 percent and segment gross margin increased 56 percent.
Revenues and segment gross margin both benefitted from the advanced
development of a customer-funded engineering and design project.
Rental Tools segment revenues were $87.2 million, segment gross margin was $33.3 million and segment gross margin as a percentage of revenues was 38.2 percent. Compared with the 2014 first quarter, revenues increased 8 percent and segment gross margin increased 16 percent. The increases in revenues and segment gross margin were primarily due to higher utilization and modest price improvements in our U.S. land markets, though the benefits were dampened by difficult market conditions and operating disruptions in some key international regions.
General and administrative expense declined to $7.0 million for the 2014 second quarter, from $9.0 million for the 2014 first quarter, primarily due to a non-routine item, the receipt in the second quarter of $1.5 million from an escrow account established in connection with the ITS acquisition.
In addition to the $1.5 million of escrow funds received, non-routine items in the second quarter include $0.5 million in debt extinguishment expenses associated with the refinancing of our 9.125 percent Senior Notes. Together, these non-routine items increased 2014 second quarter net income by $0.6 million, or $0.01 per diluted share, and adjusted EBITDA by $1.5 million.
Capital expenditures year-to-date through June 2014 were $106.2 million.
"Our attention remains focused on developing strong, durable and competitive operations capable of providing our customers with innovative, reliable and efficient business solutions while producing sustainable and profitable results, solid returns and continued 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 Wednesday, August 6, 2014, to review reported results. The call will be available by telephone at (719) 325-2429. 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 August 6, 2014 through August 13, 2014 at (719) 457-0820, using the access code 8098371#.
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.
PARKER DRILLING COMPANY
Consolidated Condensed Balance Sheets
(Dollars in Thousands)
June 30, 2014 December 31, 2013
------------- -----------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $86,446 $148,689
Accounts and Notes
Receivable, Net 258,578 257,889
Rig Materials and Supplies 45,501 41,781
Deferred Costs 9,621 13,682
Deferred Income Taxes 8,876 9,940
Other Current Assets 50,579 47,302
TOTAL CURRENT ASSETS 459,601 519,283
------- -------
PROPERTY, PLANT AND
EQUIPMENT, NET 906,099 871,356
OTHER ASSETS
Deferred Income Taxes 121,483 102,420
Other Assets 36,793 41,697
------ ------
TOTAL OTHER ASSETS 158,276 144,117
------- -------
TOTAL ASSETS $1,523,976 $1,534,756
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-
Term Debt $10,000 $25,000
Accounts Payable and Accrued
Liabilities 191,269 182,152
------- -------
TOTAL CURRENT LIABILITIES 201,269 207,152
------- -------
LONG-TERM DEBT 610,000 628,781
LONG-TERM DEFERRED TAX
LIABILITY 47,915 38,767
OTHER LONG-TERM LIABILITIES 20,357 26,914
TOTAL CONTROLLING INTEREST IN
STOCKHOLDERS' EQUITY 641,091 631,696
Noncontrolling interest 3,344 1,446
----- -----
TOTAL EQUITY 644,435 633,142
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,523,976 $1,534,756
========== ==========
Current Ratio 2.28 2.51
Total Debt as a Percent of
Capitalization 49% 51%
Book Value Per Common Share $5.27 $5.24
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended
March 31,
---------
Three Months Ended June 30,
---------------------------
2014 2013 2014
---- ---- ----
REVENUES $254,234 $225,954 $229,225
EXPENSES:
Operating Expenses 174,569 143,401 166,025
Depreciation and
Amortization 36,180 32,280 34,337
210,749 175,681 200,362
------- ------- -------
TOTAL OPERATING GROSS
MARGIN 43,485 50,273 28,863
------ ------ ------
General and Administrative
Expense (7,007) (22,203) (8,964)
Gain (Loss) on Disposition
of Assets, Net 1,019 517 (129)
----- ---
TOTAL OPERATING INCOME 37,497 28,587 19,770
------ ------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (10,599) (10,741) (12,039)
Interest Income 88 2,203 32
Loss on extinguishment of
debt (479) - (29,673)
Change in fair value of
derivative positions - 17 -
Other 1,032 (459) 895
TOTAL OTHER EXPENSE (9,958) (8,980) (40,785)
------ ------ -------
INCOME (LOSS) BEFORE INCOME
TAXES 27,539 19,607 (21,015)
INCOME TAX EXPENSE 11,702 11,233 (8,623)
------ ------ ------
NET INCOME (LOSS) 15,837 8,374 (12,392)
------ ----- -------
Less: net income (loss)
attributable to
noncontrolling interest 156 93 157
NET INCOME (LOSS)
ATTRIBUTABLE TO
CONTROLLING INTEREST $15,681 $8,281 $(12,549)
======= ====== ========
EARNINGS PER SHARE - BASIC
Net Income (loss) $0.13 $0.07 $(0.10)
EARNINGS PER SHARE - DILUTED
Net Income (loss) $0.13 $0.07 $(0.10)
NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE
Basic 121,078,359 119,483,780 120,368,650
Diluted 122,764,247 121,860,011 120,368,650
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Six Months Ended June 30,
-------------------------
2014 2013
---- ----
REVENUES $483,459 $393,090
EXPENSES:
Operating Expenses 340,594 260,147
Depreciation and
Amortization 70,517 61,792
411,111 321,939
------- -------
TOTAL OPERATING GROSS MARGIN 72,348 71,151
------ ------
General and Administrative
Expense (15,971) (35,049)
Gain on Disposition of
Assets, Net 890 1,665
TOTAL OPERATING INCOME 57,267 37,767
------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (22,638) (20,747)
Interest Income 120 2,262
Loss on extinguishment of
debt (30,152) -
Change in fair value of
derivative positions - 54
Other 1,927 (661)
TOTAL OTHER EXPENSE (50,743) (19,092)
INCOME (LOSS) BEFORE INCOME
TAXES 6,524 18,675
----- ------
INCOME TAX EXPENSE (BENEFIT) 3,079 9,729
----- -----
NET INCOME (LOSS) 3,445 8,946
Less: net income (loss)
attributable to
noncontrolling interest 313 73
NET INCOME (LOSS)
ATTRIBUTABLE TO CONTROLLING
INTEREST $3,132 $8,873
====== ======
EARNINGS PER SHARE - BASIC $0.03 $0.07
EARNINGS PER SHARE - DILUTED $0.03 $0.07
NUMBER OF COMMON SHARES USED IN COMPUTING
EARNINGS PER SHARE:
Basic 120,726,004 119,177,431
Diluted 122,586,056 121,498,223
PARKER DRILLING COMPANY
Selected Financial Data
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
June 30, March 31,
--------
2014 2013 2014
---- ---- ----
REVENUES:
Rental Tools $87,169 $82,022 $80,506
U.S. Barge Drilling 40,289 38,301 30,490
U.S. Drilling 20,039 17,910 19,417
International Drilling 91,754 83,182 85,469
Technical Services 14,983 4,539 13,343
Total Revenues 254,234 225,954 229,225
OPERATING
EXPENSES:
Rental Tools 53,842 43,675 51,755
U.S. Barge Drilling 18,761 18,290 18,654
U.S. Drilling 15,045 14,270 13,854
International Drilling 72,954 62,707 69,070
Technical Services 13,967 4,459 12,692
Total Operating Expenses 174,569 143,401 166,025
OPERATING GROSS
MARGIN:
Rental Tools 33,327 38,347 28,751
U.S. Barge Drilling 21,528 20,011 11,836
U.S. Drilling 4,994 3,640 5,563
International Drilling 18,800 20,475 16,399
Technical Services 1,016 80 651
Depreciation and Amortization (36,180) (32,280) (34,337)
Total Operating Gross Margin 43,485 50,273 28,863
PARKER DRILLING COMPANY
Adjusted EBITDA
(Dollars in Thousands)
Three Months Ended
------------------
June 30, 2014 March 31, 2014 December 31, 2013 September 30, 2013 June 30, 2013
------------- -------------- ----------------- ------------------ -------------
Net Income (Loss) Attributable to
Controlling Interest $15,681 $(12,549) $10,174 $7,970 $8,281
Adjustments:
Income Tax (Benefit) Expense 11,702 (8,623) 6,766 9,112 11,233
Interest Expense 10,599 12,039 13,946 13,127 10,741
Other Income and Expense (641) 28,746 (2,313) 5,234 (1,761)
(Gain) Loss on Disposition of Assets,
Net (1,019) 129 (1,234) (1,094) (517)
Depreciation and Amortization 36,180 34,337 36,378 35,882 32,280
Provision for Reduction in Carrying
Value of Certain Assets - - 2,544 -
--- --- ---
Adjusted EBITDA* 72,502 54,079 66,261 70,231 60,257
====== ====== ====== ====== ======
Adjustments:
Non-routine Items (1,500) - 3,306 4,819 11,390
------ --- ----- ------
Adjusted EBITDA after Non-routine
Items $71,002 $54,079 $69,567 $75,050 $71,647
======= ======= ======= ======= =======
*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.
SOURCE Parker Drilling Company
