PARKER DRILLING COMPANY 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.
PARKER DRILLING COMPANY
Consolidated Condensed Balance Sheets
(Dollars in Thousands, Except Per Share Data)
September 30, 2014 December 31, 2013
------------------ -----------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $78,311 $148,689
Accounts and Notes Receivable,
Net 264,803 257,889
Rig Materials and Supplies 45,774 41,781
Deferred Costs 6,857 13,682
Deferred Income Taxes 8,015 9,940
Other Current Assets 41,606 47,302
TOTAL CURRENT ASSETS 445,366 519,283
------- -------
PROPERTY, PLANT AND EQUIPMENT,
NET 912,853 871,356
OTHER ASSETS
Deferred Income Taxes 126,100 102,420
Other Assets 36,694 41,697
TOTAL OTHER ASSETS 162,794 144,117
------- -------
TOTAL ASSETS $1,521,013 $1,534,756
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term
Debt $10,000 $25,000
Accounts Payable and Accrued
Liabilities 172,464 182,152
TOTAL CURRENT LIABILITIES 182,464 207,152
------- -------
LONG-TERM DEBT 607,500 628,781
LONG-TERM DEFERRED TAX LIABILITY 54,540 38,767
OTHER LONG-TERM LIABILITIES 17,907 26,914
TOTAL CONTROLLING INTEREST IN
STOCKHOLDERS' EQUITY 654,969 631,696
Noncontrolling interest 3,633 1,446
-----
TOTAL EQUITY 658,602 633,142
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,521,013 $1,534,756
========== ==========
Current Ratio 2.44 2.51
Total Debt as a Percent of
Capitalization 49% 51%
Book Value Per Common Share $5.37 $5.24
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months
Ended June 30,
--------------
Three Months Ended September 30,
--------------------------------
2014 2013 2014
---- ---- ----
REVENUES $242,012 $237,762 $254,234
EXPENSES:
Operating Expenses 160,797 153,147 174,569
Depreciation and Amortization 36,149 35,882 36,180
196,946 189,029 210,749
------- ------- -------
TOTAL OPERATING GROSS MARGIN 45,066 48,733 43,485
------ ------ ------
General and Administrative
Expense (9,370) (14,238) (7,007)
Gain (Loss) on Disposition of
Assets, Net (457) 1,094 1,019
---- -----
TOTAL OPERATING INCOME 35,239 35,589 37,497
------ ------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (10,848) (13,127) (10,599)
Interest Income 36 130 88
Loss on extinguishment of debt - (5,218) (479)
Change in fair value of
derivative positions - - -
Other (536) (144) 1,032
TOTAL OTHER EXPENSE (11,348) (18,359) (9,958)
------- ------- ------
INCOME (LOSS) BEFORE INCOME
TAXES 23,891 17,230 27,539
INCOME TAX EXPENSE 11,014 9,112 11,702
------ ----- ------
NET INCOME (LOSS) 12,877 8,118 15,837
------ ----- ------
Less: net income (loss)
attributable to
noncontrolling interest 311 148 156
NET INCOME (LOSS) ATTRIBUTABLE
TO CONTROLLING INTEREST $12,566 $7,970 $15,681
======= ====== =======
EARNINGS PER SHARE - BASIC
Net Income (loss) $0.10 $0.07 $0.13
EARNINGS PER SHARE - DILUTED
Net Income (loss) $0.10 $0.07 $0.13
NUMBER OF COMMON SHARES USED IN COMPUTING
EARNINGS PER SHARE
Basic 121,523,674 119,990,196 121,078,359
Diluted 123,177,753 121,674,591 122,764,247
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Nine Months Ended September 30,
-------------------------------
2014 2013
---- ----
REVENUES $725,471 $630,851
EXPENSES:
Operating
Expenses 501,391 413,294
Depreciation
and
Amortization 106,666 97,674
608,057 510,968
------- -------
TOTAL
OPERATING
GROSS
MARGIN 117,414 119,883
------- -------
General
and
Administrative
Expense (25,341) (49,286)
Gain
on
Disposition
of
Assets,
Net 433 2,759
TOTAL
OPERATING
INCOME 92,506 73,356
------ ------
OTHER INCOME AND
(EXPENSE):
Interest
Expense (33,486) (33,874)
Interest
Income 156 2,392
Loss
on
extinguishment
of
debt (30,152) (5,218)
Change
in
fair
value
of
derivative
positions - 54
Other 1,391 (805)
TOTAL
OTHER
EXPENSE (62,091) (37,451)
INCOME
(LOSS)
BEFORE
INCOME
TAXES 30,415 35,905
------ ------
INCOME
TAX
EXPENSE
(BENEFIT) 14,093 18,841
------ ------
NET
INCOME
(LOSS) 16,322 17,064
Less:
net
income
(loss)
attributable
to
noncontrolling
interest 624 221
NET
INCOME
(LOSS)
ATTRIBUTABLE
TO
CONTROLLING
INTEREST $15,698 $16,843
======= =======
EARNINGS
PER
SHARE
-
BASIC $0.13 $0.14
EARNINGS
PER
SHARE
-
DILUTED $0.13 $0.14
NUMBER OF COMMON
SHARES USED IN
COMPUTING
EARNINGS PER SHARE:
Basic 120,994,728 119,443,260
Diluted 122,972,014 121,693,781
PARKER DRILLING COMPANY
Selected Financial Data
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
September 30, June 30,
-------------
2014 2013 2014
---- ---- ----
REVENUES:
Rental Tools $87,711 $89,614 $87,169
U.S. Barge Drilling 39,630 33,919 40,289
U.S. Drilling 19,687 18,693 20,039
International Drilling 88,173 88,562 91,754
Technical Services 6,811 6,974 14,983
Total Revenues $242,012 $237,762 $254,234
OPERATING EXPENSES:
Rental Tools $51,987 $48,739 $53,842
U.S. Barge Drilling 18,939 18,112 18,761
U.S. Drilling 14,395 14,786 15,045
International Drilling 69,713 64,720 72,954
Technical Services 5,763 6,790 13,967
Total Operating Expenses $160,797 $153,147 $174,569
OPERATING GROSS MARGIN:
Rental Tools $35,724 $40,875 $33,327
U.S. Barge Drilling 20,691 15,807 21,528
U.S. Drilling 5,292 3,907 4,994
International Drilling 18,460 23,842 18,800
Technical Services 1,048 184 1,016
Depreciation and Amortization (36,149) (35,882) (36,180)
Total Operating Gross Margin $45,066 $48,733 $43,485
PARKER DRILLING COMPANY
Adjusted EBITDA
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
September June 30, March 31, December September
30, 2014 2014 2014 31, 2013 30, 2013
-------- ---- ---- -------- --------
Net Income (Loss) Attributable to
Controlling Interest $12,566 $15,681 $(12,549) $10,172 $7,970
Adjustments:
Income Tax (Benefit) Expense 11,014 11,702 (8,623) 6,766 9,112
Interest Expense 10,848 10,599 12,039 13,946 13,127
Other Income and Expense 500 (641) 28,746 (2,313) 5,234
(Gain) Loss on Disposition of
Assets, Net 457 (1,019) 129 (1,234) (1,094)
Depreciation and Amortization 36,149 36,180 34,337 36,378 35,882
Provision for Reduction in
Carrying Value of Certain Assets - - - 2,544 -
--- --- --- ---
Adjusted EBITDA* 71,534 72,502 54,079 66,259 70,231
====== ====== ====== ====== ======
Adjustments:
Non-routine Items (1,250) (1,500) - 3,306 4,819
------ ------ --- -----
Adjusted EBITDA after Non-routine
Items $70,284 $71,002 $54,079 $69,565 $75,050
======= ======= ======= ======= =======
*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
