Parker Drilling Reports Results for 2009 Year and Fourth Quarter
HOUSTON, Feb. 25 /PRNewswire-FirstCall/ -- Parker Drilling (NYSE: PKD), a global drilling contractor and service provider, today reported results for the year and three-month periods ended December 31, 2009. The Company's results for the year included net income of $9.3 million or $0.08 per diluted share on revenues of $752.9 million, compared with net income of $22.7 million or $0.20 per diluted share on revenues of $829.8 million for the prior year. Excluding the effects of non-routine items the Company reported 2009 net income of $16.5 million or $0.14 per diluted share, compared with similarly adjusted 2008 net income of $92.6 million or $0.82 per diluted share. Adjusted EBITDA, excluding non-routine items, was $166.8 million, compared with $285.6 million for the prior year.
For the three months ended December 31, 2009, Parker reported a net loss of $4.3 million or $0.04 per diluted share on revenues of $175.8 million, compared with a net loss of $40.2 million or $0.36 per diluted share on revenues of $212.4 million for the prior year's fourth quarter. Excluding the effects of non-routine items the Company reported a 2009 fourth quarter net loss of $0.5 million or $0.00 per diluted share, compared with similarly adjusted 2008 fourth quarter net income of $29.2 million or $0.26 per diluted share. Adjusted EBITDA, excluding non-routine items, was $34.5 million, compared with $75.6 million for the prior year's fourth quarter.
"As a result of our business balance and geographic diversity Parker was able to lessen the impact of the volatile conditions and difficult market forces of 2009," said president and chief executive officer David C. Mannon. "We delivered sound financial results despite significant market instability and uncertainty. Guided by our long-term strategy, we continued to invest for future growth during this industry down-cycle and to position ourselves for stronger performance in the years ahead. In 2009 we captured the lead position in the U.S. barge drilling market, expanded the presence of our rental tools operation and moved forward on our projects to begin drilling operations in Alaska, a growing market for us. We enter 2010 in sound financial condition with sufficient resources to provide for the needs of our current operations and to fund our growth initiatives."
Fourth Quarter Highlights
- Revenues of $175.8 million, though below the prior year's fourth quarter revenues, were better than the 2009 third quarter in all but the Construction Contracts segment;
- Gross margin for the Rental Tools segment increased, compared to the 2009 third quarter, due to improving demand and less price discounting;
- The U.S. Barge Drilling segment reported a positive gross margin for the 2009 fourth quarter. In doing so, it achieved a better-than-breakeven gross margin for the year, believed to be one of the best performances in that marketplace;
- The Company's Alaska projects continued to progress. The BP-owned Liberty rig is being commissioned on site in preparation to begin drilling operations in mid-2010. Construction continued on the two Parker-owned arctic land rigs scheduled for delivery to Alaska during the third quarter;
- Parker employees set a new company record for safety. The Company's Total Recordable Incident Rate (TRIR) for 2009 was 0.48, a better safety performance than our 2008 record-setting level and significantly better than the industry's average TRIR of 1.19.
Mr. Mannon added, "Our 2009 results reflect the impact of the decline in domestic drilling and slowdown of international activity and demonstrate the advantages of our focused strategy. In the difficult market conditions we faced we remained profitable and we made market gains in some key areas."
Commenting on the business outlook, Mr. Mannon said, "More recently, market declines have moderated and there are signs in some areas that improvements are underway. The utilization rate for the U.S. Gulf of Mexico barge drilling fleet has improved, though dayrates remain low. The domestic land rig count has recovered significantly, particularly in the shale plays where rental tool usage is more prevalent, leading to growing demand for rental tools and a lessening of price discounts. The number of international rig tenders has grown, yet commitments are slow to develop and pressure on dayrates remains. Our project engineering and project management opportunities are growing, indicating an expanded field for Parker's unique capabilities and offering the prospect of significant future growth from this business segment.
"Though we are encouraged by the recent direction of activity in some of our markets, we remain cautious about the immediacy of a broad upturn and the near term impact on our financial performance. We believe we are well positioned to deliver profitable growth as the markets improve. To enhance the potential of this, we will continue to focus on cost management within our operations, improvements in delivering efficient performance to our customers and maintaining a safe working environment for our employees," Mannon concluded.
Fourth Quarter Review
Results for the three months ended December 31, 2009, included the impact of several non-routine items that decreased net income by $3.8 million. At the end of 2009 Parker retired three unutilized and previously cold-stacked rigs – two workover barge rigs and one international land rig. The effect of these retirements was to reduce pre-tax income by $1.9 million or $0.01 per diluted share, after taxes. In addition, the Company received a settlement in connection with litigation over a Parker-owned rig damaged in 2005, resulting in pre-tax income of $3.8 million or $0.02 per diluted share, after taxes. Also included in non-routine expenses are the costs related to the ongoing Department of Justice and Securities and Exchange Commission investigations and our related internal review regarding services provided by a customs agent in certain countries and possible violations of the Foreign Corrupt Practices Act and other laws, in addition to a provision for other regulatory expenses. The fourth quarter pre-tax cost of these was $3.9 million or $0.02 per diluted share, after taxes. The Company also adjusted the expected impact of a previously recorded recovery of foreign tax credits. The fourth quarter impact of this was $2.5 million or $0.02 per diluted share. The results for the 2008 fourth quarter included non-routine, net after-tax expense of $69.8 million or $0.62 per diluted share. Details of the non-routine items are provided in the attached financial tables.
Parker's revenues for the 2009 fourth quarter declined to $175.8 million, or by 17 percent, from 2008 fourth quarter revenues of $212.4 million. The Company's 2009 fourth quarter gross margin declined to $43.0 million, or by 46 percent, from the 2008 fourth quarter gross margin of $79.6 million, while gross margin as a percentage of revenues decreased to 24.5 percent in the 2009 fourth quarter from 37.5 percent in the 2008 fourth quarter.
- International Drilling revenues declined to $72.7 million from $86.2 million, and gross margin declined to $21.9 million from $27.7 million. The decrease in revenues was the result of lower average fleet utilization, modestly higher average dayrates and the impact of Barge Rig 257 being in a shipyard for a scheduled overhaul and upgrade during part of the quarter. These effects were partially offset by lower operating costs throughout the segment.
Average fleet utilization for the 2009 fourth quarter was 64 percent, compared with 87 percent for the prior year's fourth quarter and 61 percent for the preceding third quarter. For the fourth quarter, the ten-rig Americas regional fleet operated at 80 percent utilization, the twelve-rig CIS/AME regional fleet operated at 68 percent utilization, and the eight-rig Asia Pacific regional fleet operated at 46 percent utilization. Rig 259 was retired at the end of 2009, reducing the Company's international fleet to 30 rigs and the CIS/AME regional fleet to eleven rigs. (Additional rig fleet information is available on Parker's website under "Investor Relations" at "Quarterly Support Materials"). |
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- U.S. Barge Drilling revenues declined to $14.5 million from $33.6 million, while gross margin fell to $1.3 million from $14.7 million. The operation produced a better-than-breakeven gross margin despite the downturn in industry demand, lower fleet utilization and significantly reduced dayrates.
Average fleet utilization for the 2009 fourth quarter was 51 percent, compared with 61 percent for the prior year's fourth quarter and 33 percent for the preceding third quarter. The Company's barge fleet dayrates averaged $19,300 for the 2009 fourth quarter, compared with $39,400 for the prior year's fourth quarter and $26,200 for the preceding third quarter. At year-end 2009, Parker's Gulf of Mexico barge rig fleet was reduced to 13 rigs with the retirements of Rigs 6B and 16B. (Additional rig fleet information is available on Parker's website under "Investor Relations" at "Quarterly Support Materials"). |
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- Revenues for Rental Tools declined to $25.1 million from $45.7 million, and the segment's gross margin declined to $13.8 million from $28.7 million, primarily due to the decline in U.S. land and Gulf of Mexico shelf drilling activity and the impact of price discounting. This was partially offset by increased demand for workover equipment, growing coverage in the U.S. shale drilling areas and additional offshore deep drilling and international placements.
- Project Management and Engineering Services revenues declined to $27.6 million from $37.9 million, and gross margin declined to $5.4 million from $8.1 million. The prior year included revenues associated with the relocation and upgrade of the "Yastreb" for ExxonNeftegas (ENL) on Sakhalin Island and operational revenues for ENL's Orlan platform which has since moved to a warm-stack rate with reduced crews.
- Construction Contract revenues increased to $35.8 million from $8.9 million while gross margin increased to $0.6 million from $0.5 million. These increases are primarily due to the expanded scope and content of reimbursables at this stage of the BP Liberty project.
Capital Spending and Capitalization
Capital expenditures for 2009 were $160.1 million, including $33.2 million for the 2009 fourth quarter. The 2009 spending included $62.2 million for the construction of Parker's two newbuild arctic land rigs for Alaska and $36.8 million for tubular goods and other rental equipment.
At December 31, 2009, total debt was $423.8 million and the Company's total debt-to-capitalization ratio was 41.6 percent, compared with 43.1 percent at the end of 2008. The Company's term loan is being amortized through 2013. The remaining components of the Company's debt do not mature until 2012 and 2013.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. CST (11:00 a.m. EST) on Thursday, February 25, 2010 to discuss its 2009 fourth quarter results. Those interested in listening to the call by telephone may do so by dialing 480-629-9770. Alternatively, the call can be accessed through the Investor Relations section of the Company's Web site at http://www.parkerdrilling.com. A replay of the call will be available by telephone from February 25 to March 4, 2010 by dialing 303-590-3030 and using the access code 4204147#, and for 12 months on the Company's Web site.
Cautionary Statement
This release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Securities Acts. All statements, 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, including earnings per share guidance, the outlook for rig utilization and dayrates, general industry conditions including demand for drilling and customer spending and the factors affecting demand, competitive advantages including cost effective integrated solutions and technological innovation, future technological innovation, future operating results of the Company's rigs, rental tools operations and projects under management, capital expenditures, expansion and growth opportunities, asset sales, successful negotiation and execution of contracts, strengthening of financial position, increase in market share and other such matters are forward-looking statements. Although the Company believes that its expectations stated in this release are based on reasonable assumptions, actual results may differ materially from those expressed or implied in the forward-looking statements due to certain risk factors, including the ongoing credit crisis, the volatility in oil and natural gas prices, which could reduce the demand for drilling services. For a detailed discussion of risk factors that could cause actual results to differ materially from the Company's expectations, please refer to the Company's reports filed with the SEC, including the report on Form 10-K for the year December 31, 2008. Each forward-looking statement speaks only as of the date of this release and the Company undertakes no obligation to publicly update or revise any forward-looking statement.
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
December 31, 2009 December 31, 2008
----------------- -----------------
(Unaudited)
ASSETS (Dollars in Thousands)
CURRENT ASSETS
Cash and Cash Equivalents $108,803 $172,298
Accounts and Notes Receivable, Net 188,687 186,164
Rig Materials and Supplies 31,633 30,241
Deferred Costs 4,531 7,804
Deferred Income Taxes 9,650 9,735
Other Current Assets 100,225 67,049
------- ------
TOTAL CURRENT ASSETS 443,529 473,291
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 716,798 675,548
OTHER ASSETS
Deferred Income Taxes 55,749 22,956
Other Assets 27,010 33,925
------ ------
TOTAL OTHER ASSETS 82,758 56,881
------ ------
TOTAL ASSETS $1,243,086 $1,205,720
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt $12,000 $6,000
Accounts Payable and Accrued
Liabilities 177,036 152,528
------- -------
TOTAL CURRENT LIABILITIES 189,036 158,528
------- -------
LONG-TERM DEBT 411,831 435,394
LONG-TERM DEFERRED TAX LIABILITY 16,074 8,230
OTHER LONG-TERM LIABILITIES 30,246 21,396
STOCKHOLDERS' EQUITY 595,899 582,172
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,243,086 $1,205,720
========== ==========
Current Ratio 2.33 2.99
Total Debt as a Percent of
Capitalization 42% 43%
Book Value Per Common Share $5.13 $5.13
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in Thousands) (Dollars in Thousands)
REVENUES:
International
Drilling $72,712 $86,211 $293,338 $325,096
U.S. Drilling 14,533 33,634 49,628 173,633
Project Management
and Engineering
Services 27,631 37,928 109,445 110,147
Construction
Contract 35,800 8,911 185,442 49,412
Rental Tools 25,109 45,696 115,057 171,554
------ ------ ------- -------
TOTAL REVENUES 175,785 212,380 752,910 829,842
------- ------- ------- -------
OPERATING EXPENSES:
International
Drilling 50,858 58,494 191,486 231,409
U.S. Drilling 13,233 18,929 48,054 84,431
Project Management
and Engineering
Services 22,202 29,858 85,799 91,677
Construction
Contract 35,194 8,442 177,311 46,815
Rental Tools 11,302 17,034 52,740 67,048
Depreciation
and Amortization 28,593 31,961 113,975 116,956
------ ------ ------- -------
TOTAL OPERATING
EXPENSES 161,382 164,718 669,365 638,336
------- ------- ------- -------
TOTAL OPERATING GROSS
MARGIN 14,403 47,662 83,545 191,506
------ ------ ------ -------
General and
Administrative Expense (11,485) (10,288) (45,483) (34,708)
Impairment of Goodwill - (100,315) - (100,315)
Provision for Reduction
in Carrying Value of
Certain Assets (1,889) - (4,646) -
Gain on Disposition of
Assets, Net 3,899 683 5,906 2,697
----- --- ----- -----
TOTAL OPERATING INCOME 4,928 (62,258) 39,322 59,180
----- ------- ------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (6,787) (8,358) (29,450) (29,266)
Interest Income 146 284 1,041 1,405
Equity in Loss
of Unconsolidated
Joint Venture and
Related Charges, net
of tax - - - (1,105)
Other Income (Expense) (721) (1,047) (1,086) (544)
---- ------ ------ ----
TOTAL OTHER INCOME
AND (EXPENSE) (7,362) (9,121) (29,495) (29,510)
------ ------ ------- -------
INCOME (LOSS) BEFORE
INCOME TAXES (2,434) (71,379) 9,827 29,670
------ ------- ----- ------
INCOME TAX EXPENSE
(BENEFIT)
Current 1,200 (14,563) 15,424 (1,539)
Deferred 690 (16,615) (14,864) 8,481
--- ------- ------- -----
TOTAL INCOME TAX
EXPENSE (BENEFIT) 1,890 (31,178) 560 6,942
----- ------- --- -----
NET INCOME $(4,324) $(40,201) $9,267 $22,728
======= ======== ====== =======
EARNINGS PER SHARE -
BASIC
Net Income $(0.04) $(0.36) $0.08 $0.20
EARNINGS PER SHARE -
DILUTED
Net Income $(0.04) $(0.36) $0.08 $0.20
NUMBER OF COMMON
SHARES USED IN
COMPUTING EARNINGS
PER SHARE
Basic 113,288,308 111,866,943 113,000,555 111,400,396
Diluted 115,483,718 112,148,249 114,946,584 112,430,545
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
Three Months Ended
---------------------------------
December 31, September 30,
-------------- -------------
2009 2008 2009
---- ---- ----
(Dollars in Thousands)
REVENUES:
International Drilling $72,712 $86,211 $63,966
U.S. Drilling 14,533 33,634 12,350
Project Management and
Engineering Services 27,631 37,928 25,869
Construction Contract 35,800 8,911 55,325
Rental Tools 25,109 45,696 23,899
------ ------ ------
Total Revenues 175,785 212,380 181,409
------- ------- -------
OPERATING EXPENSES:
International Drilling 50,858 58,494 41,964
U.S. Drilling 13,233 18,929 10,057
Project Management and
Engineering Services 22,202 29,858 19,420
Construction Contract 35,194 8,442 52,203
Rental Tools 11,302 17,034 12,232
------ ------ ------
Total Operating Expenses 132,789 132,757 135,876
------- ------- -------
OPERATING GROSS MARGIN:
International Drilling 21,854 27,717 22,002
U.S. Drilling 1,300 14,705 2,293
Project Management and
Engineering Services 5,429 8,070 6,449
Construction Contract 606 469 3,122
Rental Tools 13,807 28,662 11,667
Depreciation and Amortization (28,593) (31,961) (29,307)
------- ------- -------
Total Operating Gross Margin 14,403 47,662 16,226
General and Administrative Expense (11,485) (10,288) (9,812)
Impairment of Goodwill - (100,315) -
Provision for Reduction in
Carrying Value of Certain Assets (1,889) - (2,757)
Gain on Disposition of Assets, Net 3,899 683 1,225
------ -------- ------
TOTAL OPERATING INCOME $4,928 $(62,258) $4,882
====== ======== ======
Marketable Rig Count Summary
As of December 31, 2009
Total
-----
U.S. Gulf of Mexico Barge Rigs
Intermediate 3
Deep 10
---
Total U.S. Gulf of Mexico Barge Rigs 13
International Land and Barge Rigs
Asia Pacific 8
Americas 10
CIS/AME 11
Other 1
---
Total International Land and Barge Rigs 30
---
Total Marketable Rigs 43
===
Adjusted EBITDA
(Dollars in Thousands)
Three Months Ended
----------------------------------------------------------
December 31, September 30, June 30, March 31, December 31,
2009 2009 2009 2009 2008
------------ ------------- -------- --------- ------------
Previously
Reported
Net Income
(Loss) $(4,324) $7,094 $4,391 $2,106 $(39,477)
Restated
Interest
Expense,
Net of Tax -
Per APB 14-1 - - - - (724)
--- --- --- --- ----
Restated Net
Income
(Loss) (4,324) 7,094 4,391 2,106 (40,201)
Adjustments:
Income Tax
(Benefit)
Expense 1,890 (9,155) 5,079 2,746 (31,178)
Total Other
Income and
Expense 7,362 6,943 7,398 7,792 9,121
Loss/(Gain) on
Disposition of
Assets, Net (3,899) (1,225) (704) (78) (683)
Impairment of
Goodwill - - - - 100,315
Depreciation
and
Amortization 28,593 29,307 28,951 27,124 31,961
Provision for
Reduction in
Carrying
Value
of Certain
Assets 1,889 2,757 - - -
----- ----- --- --- ---
Adjusted EBITDA $31,511 $35,721 $45,115 $39,690 $69,335
======= ======= ======= ======= =======
Adjustments:
Non-routine
Items 2,998 2,402 4,048 5,308 6,279
----- ----- ----- ----- -----
Adjusted EBITDA
after Non-routine
Items $34,509 $38,123 $49,163 $44,998 $75,614
======= ======= ======= ======= =======
Three Months Ended
-----------------------------------------------------------
September 30, June 30, March 31, December 31, September 30,
2008 2008 2008 2007 2007
------------- -------- --------- ------------ -------------
Previously
Reported
Net Income
(Loss) $18,551 $22,596 $23,888 $34,571 $22,653
Restated
Interest
Expense,
Net of Tax -
Per APB 14-1 (721) (699) (686) (670) (562)
---- ---- ---- ---- ----
Restated Net
Income
(Loss) 17,830 21,897 23,202 33,901 22,091
Adjustments:
Income Tax
(Benefit)
Expense 19,673 13,762 4,685 (21,830) 18,803
Total Other
Income and
Expense 6,344 6,531 7,514 31,385 9,706
Loss/(Gain) on
Disposition of
Assets, Net (799) (636) (579) 784 (543)
Impairment of
Goodwill
Depreciation
and
Amortization 30,663 28,166 26,166 25,059 23,043
Provision for
Reduction in
Carrying
Value
of Certain
Assets - - - 371 1,091
--- --- --- --- -----
Adjusted EBITDA $73,711 $69,720 $60,988 $69,670 $74,191
======= ======= ======= ======= =======
Adjustments:
Non-routine
Items 2,264 2,885 441 - -
----- ----- --- --- ---
Adjusted EBITDA
after Non-routine
Items $75,975 $72,605 $61,429 $69,670 $74,191
======= ======= ======= ======= =======
PARKER DRILLING COMPANY AND SUBSIDIARIES
Reconciliation of Non-Routine Items *
(Unaudited)
(Dollars in Thousands, except Per Share)
Three Months Ending Year Ending
December 31, 2009 December 31, 2009
----------------- -----------------
Net income $(4,324) $9,267
Earnings per diluted share $(0.04) $0.08
Adjustments:
Provision for reduction in
carrying value $1,889 $4,646
Rig 57B settlement (3,750) (3,750)
U.S. regulatory
investigations / legal
matters 3,944 15,702
----- ------
Total adjustments $2,083 $16,598
Tax effect of pre-tax non-
routine adjustments (729) (5,809)
Prior Years Foreign Tax
Credits/Fin 48 reserve 2,464 (3,589)
----- ------
Net non-routine
adjustments $3,818 $7,200
------ ------
Adjusted net income $(506) $16,467
===== =======
Adjusted earnings per diluted share $(0.00) $0.14
====== =====
Three Months Ending Year Ending
December 31, 2008 December 31, 2008
----------------- -----------------
Previously reported net income $(39,477) $25,558
Previously reported earnings
per diluted share $(0.35) $0.23
Restated interest expense,
net of tax - per APB 14-1 $(724) $(2,830)
Restated net income $(40,201) $22,728
Restated earnings per share $(0.36) $0.20
Adjustments:
Impairment of Goodwill $100,315 $100,315
Saudi Arabia - 1,105
FIN 48 tax benefit - Kazakhstan - (10,560)
PNG tax - 4,127
Other FIN 48 adjustments - 2,407
Prior year tax credits (12,539) (12,539)
DOJ investigation 6,279 11,869
----- ------
Total adjustments $94,055 $96,724
Tax effect of non-routine
adjustments (24,672) (26,891)
------- -------
Net non-routine
adjustments $69,384 $69,833
------- -------
Adjusted net income $29,183 $92,561
======= =======
Adjusted earnings per diluted share $0.26 $0.82
===== =====
* Adjusted net income, 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
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