Parker Drilling Reports 2015 First Quarter Results

HOUSTON, May 5, 2015 /PRNewswire/ -- Parker Drilling Company (NYSE-PKD), an international provider of drilling services and rental tools to the energy industry, today reported results for the quarter ended March 31, 2015, including net income of $3.2 million, or $0.03 per diluted share, on revenues of $204.1 million.  First quarter adjusted EBITDA was $53.4 million, compared with $65.2 million for the preceding quarter.

"In the 2015 first quarter, while we experienced significant declines in our U.S. markets for rental tools and barge drilling services, we increased our international and Alaska drilling fleet utilization, and benefited from growth in our international O&M (operations and maintenance) and project services," said Gary Rich, chairman, president and chief executive officer.  "Our results also reflect the impact of cost reductions throughout the business.

"Solid cash flow from operations throughout the quarter allowed us to reduce debt by $30 million and close the quarter with a strong cash position. During the quarter we also increased the capacity of our revolving credit facility and extended its maturity.

"We achieved good operating results and a solid financial condition by maintaining our clear focus on lowering our cost base, sustaining our utilization, managing our cash and liquidity, and preserving our ability to respond when conditions improve. We reacted quickly and decisively to the severe downturn in drilling activity that first impacted U.S. drilling markets and has begun to affect international markets.  We are prepared to make further adjustments to our business to address changing market conditions and take advantage of opportunities as they occur."

Outlook

"We believe overall energy market conditions will remain weak. We expect our Rental Tools Services business to continue to be impacted by the severe downturn in U.S. land and shallow water offshore drilling markets, with lower utilization and continued price pressure.  This may be moderated by improvements in our international rental tools operations.  Similarly, we expect our Drilling Services business to continue to be impacted by the sharp decline in U.S. lower 48 drilling activity, tempered by more resilient activity in our International & Alaska Drilling segment, particularly international O&M services and drilling operations in Alaska," Mr. Rich added.

First Quarter Review

Parker Drilling's revenues for the 2015 first quarter, compared with the 2014 fourth quarter, declined 16 percent to $204.1 million from $243.2 million, operating gross margin excluding depreciation and amortization expense (gross margin) declined 14 percent to $64.8 million from $75.2 million and gross margin as a percentage of revenues was 31.8 percent, compared with 30.9 percent for the prior period.

For the Company's Drilling Services business, revenues declined 15 percent to $128.0 million from $150.8 million, gross margin declined 1 percent to $35.5 million from $35.9 million, and gross margin as a percentage of revenues was 27.7 percent, compared with 23.8 percent for the prior period.  The decrease in revenues is primarily due to the sharp decline in barge drilling activity in the U.S. Gulf of Mexico inland water drilling market and a decrease in revenues from reimbursable expenses. 

• U.S. (Lower 48) Drilling revenues were $14.1 million and gross margin was $0.1 million.  Both revenues and gross margin were below 2014 fourth quarter levels, primarily due to lower utilization and average dayrate for our barge drilling rig fleet in the U.S. Gulf of Mexico. 
• International & Alaska Drilling revenues were $113.9 million, gross margin was $35.4 million, and gross margin as a percentage of revenues was 31.1 percent.  Compared with the 2014 fourth quarter, revenues decreased 4 percent and gross margin increased 41 percent.  The decline in revenues was primarily due to a decrease in revenues from reimbursable expenses.  The increase in gross margin reflects a greater contribution from O&M and project activities, the benefit of early termination and demobilization fees, and operating expense reductions.

Rental Tools Services revenues were $76.1 million, gross margin was $29.3 million and gross margin as a percentage of revenues was 38.5 percent. Compared with the 2014 fourth quarter, revenues decreased 18 percent and gross margin decreased 25 percent. Reduced revenues and gross margin were primarily due to the continued decline in U.S. land and shallow water offshore drilling activity and the resulting lower demand and stiff price competition for U.S. rental tools services, as well as softer demand in international rental tools markets.  This was partially offset by lower operating costs.

General and Administrative Expense increased to $10.8 million for the 2015 first quarter, from $9.7 million for the 2014 fourth quarter. The increased expense is primarily due to a one-time gain in the 2014 fourth quarter from a change in our employee benefit program and incremental expenses in the 2015 first quarter associated with implementation of our new ERP system.

Capital expenditures year-to-date through March 31, 2015 were $33.5 million. 

"In current market conditions, we believe customers will value, more than ever, our focus on operational execution and on providing innovative, reliable and efficient solutions that help them safely manage their costs and mitigate their risks.  We believe we are in sound condition, prepared to meet the challenges ahead and capture opportunities that arise," 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, May 6, 2015, to review reported results.  The call will be available by telephone at (888) 523-1228, access code 5566922.  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 or by telephone for 1 week from May 6, 2015 at (888) 203-1112, using the access code 5566922#.

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 (NYSE: PKD) 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 Drilling-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.

SOURCE Parker Drilling

Related Links

http://www.parkerdrilling.com

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