Parker Drilling Reports Fourth Quarter Results
HOUSTON, Feb. 23, 2011 /PRNewswire/ -- Parker Drilling (NYSE: PKD), a drilling contractor and service provider, today reported results for the 2010 fourth quarter and annual periods ended December 31, 2010. The Company's results for the fourth quarter included a net loss attributable to controlling interest of $13.4 million or $0.12 per diluted share on revenues of $173.3 million, compared with a net loss attributable to controlling interest of $4.3 million or $0.04 per diluted share on revenues of $175.8 million for the 2009 fourth quarter. Excluding the effects of non-routine items the Company reported net income attributable to controlling interest of $1.5 million or $0.01 per diluted share compared with a similarly adjusted 2009 fourth quarter net loss attributable to controlling interest of $0.5 million or $0.00 per diluted share. Adjusted EBITDA, excluding non-routine items, was $48.0 million, compared with $34.5 million for the prior year's fourth quarter.
"Our fourth quarter results reflect the balance that our diverse geographic and business mix provides in a cyclical industry," began Parker Drilling President and Chief Executive Officer David Mannon. "We had another record performance from our rental tools business and improved results from our U.S. barge drilling operations. Though these gains were offset, principally by declines in our international drilling segment, the overall result was a significant increase in operating income on a one percent decline in revenues. The required payment of a contested tax assessment in Kazakhstan, disclosed previously, and other non-routine items, resulted in a reported net loss for the quarter," said Mannon.
Fourth Quarter Highlights
- Parker's Rental Tools segment reported record levels of revenues, segment gross margin and segment gross margin as a percent of revenues. (Segment gross margins exclude depreciation and amortization expense.)
- The Company's U.S. barge drilling business continued to achieve year-to-year increases in rig fleet utilization, which, combined with operating improvements, have led to its highest reported revenues and segment gross margin and segment gross margin as a percent of revenues since 2008.
- International Drilling benefited from a new contract in the Asia Pacific region, deploying a rig in Papua New Guinea that had been previously stacked. In addition, the contract for Rig 257, Parker's Caspian Sea arctic barge drilling rig, was extended into 2012.
- The Parker-operated Yastreb rig set a new, extended-reach drilling record of 40,502 feet, nearly eight miles, in total measured depth. This rig, designed, built and operated by Parker Drilling for Exxon Neftegas Limited, set this record during development drilling of the Sakhalin-1 Project's Odoptu field.
"The benefits of Parker's commitment to develop and grow its diverse, complementary operations are reflected in the results of the fourth quarter," said Mannon. "The proliferation of lateral drilling on land in the U.S., predominantly in the emerging shale plays, has raised demand for rental equipment in the markets where our Rental Tools operations are located. The pick-up in shallow water drilling in the Gulf of Mexico for oil and natural gas has renewed the barge drilling market, and, as the leading operator in that market, our business has continued to strengthen. Our international drilling rig activity slowed, mostly the result of local market conditions in the CIS/Africa-Middle East region that have idled several rigs and the effect of redeploying rigs in the Americas region in response to changed opportunities. Our project management business continued to provide a steady stream of revenues and cash flow as it performed on our existing operational contracts and continued development of additional project opportunities," he summarized. "We believe our established strengths as a drilling services provider and our diversity of operations should contribute to improved results in the year ahead and provide support for longer-term earnings growth for Parker," Mannon concluded.
Fourth Quarter Review
Parker's revenues for the 2010 fourth quarter were $173.3 million compared with 2009 fourth quarter revenues of $175.8 million. The Company's 2010 fourth quarter gross margin, before depreciation and amortization expense, was $54.2 million compared with 2009 fourth quarter gross margin of $43.0 million, while gross margin as a percentage of revenues increased to 31 percent from the 24 percent gross margin for the 2009 fourth quarter. Results for the three months ended December 31, 2010, included the impact of several non-routine expenses. These were comprised of $13.3 million related to a previously disclosed contested tax assessment in Kazakhstan; $0.5 million, pre-tax, related to the ongoing U.S. regulatory investigations and Parker's internal review regarding possible violations of the Foreign Corrupt Practices Act and other laws; and a $2.0 million, pre-tax, reserve taken for the doubtful collection of a customer receivable. These non-routine items reduced after-tax earnings by $14.9 million or $0.13 per diluted share. The results for the 2009 fourth quarter included non-routine, after-tax expense of $3.8 million or $0.04 per diluted share. Details of the non-routine items are provided in the attached financial tables.
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Average rig fleet utilization for the 2010 fourth quarter was 46 percent, compared with 64 percent for the prior year's fourth quarter. For the quarter, the ten-rig Americas regional fleet operated at 67 percent average utilization, the eleven-rig CIS/AME regional fleet operated at 33 percent average utilization and the eight-rig Asia Pacific regional fleet operated at 45 percent average utilization. Three rigs located in the Asia Pacific region are being marketed for sale, reducing the region's fleet at year-end 2010 to five rigs and Parker's overall international fleet to 27 rigs. (Additional rig fleet information is available on Parker's Web site). |
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2010 Summary
The Company's results for the 2010 year included a net loss attributable to controlling interest of $14.5 million or $0.13 per diluted share on revenues of $659.5 million, compared with net income attributable to controlling interest of $9.3 million or $0.08 per diluted share on revenues of $752.9 million for the prior year. Excluding the effects of non-routine items the Company reported adjusted net income attributable to controlling interest of $8.6 million or $0.08 per diluted share compared with similarly adjusted 2009 net income attributable to controlling interest of $16.5 million or $0.14 per diluted share. Adjusted EBITDA, excluding non-routine items, was $163.4 million for the 2010 year and $166.8 million for the prior year.
Results for the 2010 year included the impact of non-routine items that decreased after-tax earnings by $23.1 million or $0.20 per diluted share. Included in non-routine items are $7.2 million, pre-tax, of debt extinguishment costs related to the redemption of the Company's 9.625% senior notes; $5.9 million, pre-tax, of expense related to the U.S. regulatory investigations and Parker's internal review regarding possible violations of the Foreign Corrupt Practices Act and other laws; $13.3 million of expense related to a tax assessment in Kazakhstan that is currently on appeal; and a $2.0 million, pre-tax, reserve taken for the doubtful collection of a customer receivable. Net income for 2009 included $7.2 million of expense for non-routine items. Also included in segment operating expenses for 2010 are $8.8 million, pre-tax ($5.5 million, after tax), from several tax settlements and adjustments that occurred in the 2010 third quarter related to prior periods' operations.
Cash Flow and Capitalization
Capital expenditures for 2010 were $219.2 million, including $112.5 million for the construction of Parker's two newbuild arctic land rigs for Alaska and $48.9 million for the purchase of tubular goods and other rental equipment.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. CST (11:00 a.m. EST) on Wednesday, February 23, 2011, to discuss its reported results. Those interested in listening to the call by telephone may do so by dialing (480) 629-9722. The call can also be accessed through the Investor Relations section of the Company's Web site at http://www.parkerdrilling.com. A replay of the call can be accessed on the Company's Web site for 12 months and will be available by telephone from February 23 through March 3 by dialing (303) 590-3030 and using the access code 4403236#.
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 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 reports on Form 10-K and Form 10-Q. 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.
Company Description
Parker Drilling (NYSE: PKD) provides high-performance contract drilling solutions, rental tools and project management services to the energy industry. Parker's international fleet includes 25 land rigs and two offshore barge rigs, and its U.S. fleet includes 13 barge rigs in the U.S. Gulf of Mexico. The Company's rental tools business supplies premium equipment to operators on land and offshore in the U.S. and select international markets. More information about Parker Drilling can be found at http://www.parkerdrilling.com. Included in the Investor Relations section of the Company's Web site are operating status reports for Parker Drilling's rental tools segment and its international and U.S. rig fleets, updated monthly.
PARKER DRILLING COMPANY |
||||
Consolidated Condensed Balance Sheets |
||||
December 31, 2010 |
December 31, 2009 |
|||
(Unaudited) |
||||
ASSETS |
(Dollars in Thousands) |
|||
CURRENT ASSETS |
||||
Cash and Cash Equivalents |
$ 51,431 |
$ 108,803 |
||
Accounts and Notes Receivable, Net |
168,876 |
188,687 |
||
Rig Materials and Supplies |
25,527 |
31,633 |
||
Deferred Costs |
2,229 |
4,531 |
||
Deferred Income Taxes |
9,278 |
9,650 |
||
Assets held for sale |
5,287 |
- |
||
Other Current Assets |
105,496 |
100,225 |
||
TOTAL CURRENT ASSETS |
368,124 |
443,529 |
||
PROPERTY, PLANT AND EQUIPMENT, NET |
816,147 |
716,798 |
||
OTHER ASSETS |
||||
Deferred Income Taxes |
52,081 |
55,749 |
||
Other Assets |
26,944 |
27,010 |
||
TOTAL OTHER ASSETS |
79,025 |
82,759 |
||
TOTAL ASSETS |
$ 1,263,296 |
$ 1,243,086 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
CURRENT LIABILITIES |
||||
Current Portion of Long-Term Debt |
$ 12,000 |
$ 12,000 |
||
Accounts Payable and Accrued Liabilities |
163,263 |
177,036 |
||
TOTAL CURRENT LIABILITIES |
175,263 |
189,036 |
||
LONG-TERM DEBT |
460,862 |
411,831 |
||
LONG-TERM DEFERRED TAX LIABILITY |
9,324 |
16,074 |
||
OTHER LONG-TERM LIABILITIES |
29,781 |
30,246 |
||
TOTAL CONTROLLING INTEREST IN STOCKHOLDERS' EQUITY |
588,313 |
595,899 |
||
Noncontrolling interest |
(247) |
- |
||
TOTAL EQUITY |
588,066 |
595,899 |
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 1,263,296 |
$ 1,243,086 |
||
Current Ratio |
2.10 |
2.35 |
||
Total Debt as a Percent of Capitalization |
45% |
42% |
||
Book Value Per Common Share |
$ 5.05 |
$ 5.13 |
||
PARKER DRILLING COMPANY |
||||||||
Consolidated Condensed Statements of Operations |
||||||||
(Unaudited) |
||||||||
Three Months Ended December 31, |
Year Ended December 31, |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
(Dollars in Thousands) |
(Dollars in Thousands) |
|||||||
REVENUES: |
||||||||
International Drilling |
$ 49,950 |
$ 72,711 |
$ 220,371 |
$ 293,337 |
||||
U.S. Drilling |
19,191 |
14,533 |
64,543 |
49,628 |
||||
Rental Tools |
49,310 |
25,109 |
172,598 |
115,057 |
||||
Project Management and Engineering Services |
32,470 |
27,631 |
110,873 |
109,445 |
||||
Construction Contract |
22,395 |
35,801 |
91,090 |
185,443 |
||||
TOTAL REVENUES |
173,316 |
175,785 |
659,475 |
752,910 |
||||
OPERATING EXPENSES: |
||||||||
International Drilling |
39,677 |
50,858 |
177,585 |
191,486 |
||||
U.S. Drilling |
13,533 |
13,233 |
53,334 |
48,054 |
||||
Rental Tools |
16,559 |
11,302 |
60,036 |
52,740 |
||||
Project Management and Engineering Services |
27,795 |
22,202 |
89,435 |
85,799 |
||||
Construction Contract |
21,526 |
35,194 |
90,888 |
177,311 |
||||
Depreciation and Amortization |
28,526 |
28,593 |
115,030 |
113,975 |
||||
TOTAL OPERATING EXPENSES |
147,616 |
161,382 |
586,308 |
669,365 |
||||
TOTAL OPERATING GROSS MARGIN |
25,700 |
14,403 |
73,167 |
83,545 |
||||
General and Administrative Expense |
(6,695) |
(11,485) |
(30,728) |
(45,483) |
||||
Impairment of Goodwill |
- |
- |
- |
- |
||||
Provision for Reduction in Carrying Value of Certain Assets |
(1,952) |
(1,889) |
(1,952) |
(4,646) |
||||
Gain on Disposition of Assets, Net |
1,060 |
3,899 |
4,620 |
5,906 |
||||
TOTAL OPERATING INCOME |
18,113 |
4,928 |
45,107 |
39,322 |
||||
OTHER INCOME AND (EXPENSE): |
||||||||
Interest Expense |
(6,296) |
(6,787) |
(26,805) |
(29,450) |
||||
Interest Income |
59 |
146 |
257 |
1,041 |
||||
Loss on extinguishment of debt |
- |
- |
(7,209) |
- |
||||
Other Income (Expense) |
41 |
(721) |
155 |
(1,086) |
||||
TOTAL OTHER INCOME AND (EXPENSE) |
(6,196) |
(7,362) |
(33,602) |
(29,495) |
||||
INCOME (LOSS) BEFORE INCOME TAXES |
11,917 |
(2,434) |
11,505 |
9,827 |
||||
INCOME TAX EXPENSE (BENEFIT) |
||||||||
Current |
21,985 |
1,200 |
27,521 |
15,424 |
||||
Deferred |
3,377 |
690 |
(1,308) |
(14,864) |
||||
TOTAL INCOME TAX EXPENSE (BENEFIT) |
25,362 |
1,890 |
26,213 |
560 |
||||
NET INCOME (LOSS) |
(13,445) |
(4,324) |
(14,708) |
9,267 |
||||
Less: net (loss) attributable to noncontrolling interest |
(36) |
- |
(247) |
- |
||||
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |
$ (13,409) |
$ (4,324) |
$ (14,461) |
$ 9,267 |
||||
EARNINGS PER SHARE - BASIC |
||||||||
Net Income |
$ (0.12) |
$ (0.04) |
$ (0.13) |
$ 0.08 |
||||
EARNINGS PER SHARE - DILUTED |
||||||||
Net Income |
$ (0.12) |
$ (0.04) |
$ (0.13) |
$ 0.08 |
||||
NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE |
||||||||
Basic |
114,671,545 |
113,288,308 |
114,258,965 |
113,000,555 |
||||
Diluted |
114,671,545 |
115,465,565 |
114,258,965 |
114,925,446 |
||||
PARKER DRILLING COMPANY |
|||||||
Selected Financial Data |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
December 31, |
September 30, |
||||||
2010 |
2009 |
2010 |
|||||
(Dollars in Thousands) |
|||||||
REVENUES: |
|||||||
International Drilling |
$ 49,950 |
$ 72,711 |
$ 53,614 |
||||
U.S. Drilling |
19,191 |
14,533 |
14,929 |
||||
Rental Tools |
49,310 |
25,109 |
48,114 |
||||
Project Management and Engineering Services |
32,470 |
27,631 |
27,599 |
||||
Construction Contract |
22,395 |
35,801 |
27,773 |
||||
Total Revenues |
173,316 |
175,785 |
172,029 |
||||
OPERATING EXPENSES: |
|||||||
International Drilling |
39,677 |
50,858 |
51,312 |
||||
U.S. Drilling |
13,533 |
13,233 |
13,287 |
||||
Rental Tools |
16,559 |
11,302 |
16,583 |
||||
Project Management and Engineering Services |
27,795 |
22,202 |
20,378 |
||||
Construction Contract |
21,526 |
35,194 |
28,122 |
||||
Total Operating Expenses |
119,090 |
132,789 |
129,682 |
||||
OPERATING GROSS MARGIN: |
|||||||
International Drilling |
10,273 |
21,853 |
2,302 |
||||
U.S. Drilling |
5,658 |
1,300 |
1,642 |
||||
Rental Tools |
32,751 |
13,807 |
31,531 |
||||
Project Management and Engineering Services |
4,675 |
5,429 |
7,221 |
||||
Construction Contract |
869 |
607 |
(349) |
||||
Depreciation and Amortization |
(28,526) |
(28,593) |
(28,904) |
||||
Total Operating Gross Margin |
25,700 |
14,403 |
13,443 |
||||
General and Administrative Expense |
(6,695) |
(11,485) |
(7,064) |
||||
Provision for Reduction in Carrying Value of Certain Assets |
(1,952) |
(1,889) |
- |
||||
Gain on Disposition of Assets, Net |
1,060 |
3,899 |
1,176 |
||||
TOTAL OPERATING INCOME |
$ 18,113 |
$ 4,928 |
$ 7,555 |
||||
Marketable Rig Count Summary |
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As of December 31, 2010 |
|||||||
Total |
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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 |
5 |
||||||
Americas |
10 |
||||||
CIS/AME |
11 |
||||||
Other |
1 |
||||||
Total International Land and Barge Rigs |
27 |
||||||
Total Marketable Rigs |
40 |
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PARKER DRILLING COMPANY |
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Adjusted EBITDA |
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(Dollars in Thousands) |
||||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||||
December 31, 2010 |
September 30, 2010 |
June 30, 2010 |
March 31, 2010 |
December 31, 2009 |
September 30, 2009 |
June 30, 2009 |
March 31, 2009 |
December 31, 2008 |
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Previously Reported Net Income (Loss) |
$ (13,445) |
$ 492 |
$ 507 |
$ (2,051) |
$ (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) |
(13,445) |
492 |
507 |
(2,051) |
(4,324) |
7,094 |
4,391 |
2,106 |
(40,201) |
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Adjustments: |
||||||||||||||||||
Income Tax (Benefit) Expense |
25,362 |
786 |
1,624 |
(1,559) |
1,890 |
(9,155) |
5,079 |
2,746 |
(31,178) |
|||||||||
Total Other Income and Expense |
6,196 |
6,277 |
11,182 |
9,736 |
7,362 |
6,943 |
7,398 |
7,792 |
9,121 |
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Loss/(Gain) on Disposition of Assets, Net |
(1,060) |
(1,176) |
(1,712) |
(672) |
(3,899) |
(1,225) |
(704) |
(78) |
(683) |
|||||||||
Impairment of Goodwill |
- |
- |
- |
- |
- |
- |
- |
- |
100,315 |
|||||||||
Depreciation and Amortization |
28,526 |
28,904 |
29,012 |
28,588 |
28,593 |
29,307 |
28,951 |
27,124 |
31,961 |
|||||||||
Provision for Reduction in Carrying Value of Certain Assets |
1,952 |
- |
- |
- |
1,889 |
2,757 |
- |
- |
- |
|||||||||
Adjusted EBITDA |
$ 47,531 |
$ 35,283 |
$ 40,613 |
$ 34,042 |
$ 31,511 |
$ 35,721 |
$ 45,115 |
$ 39,690 |
$ 69,335 |
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Adjustments: |
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Non-routine Items |
460 |
930 |
694 |
3,811 |
2,998 |
2,402 |
4,048 |
5,308 |
6,279 |
|||||||||
Adjusted EBITDA after Non-routine Items |
$ 47,991 |
$ 36,213 |
$ 41,307 |
$ 37,853 |
$ 34,509 |
$ 38,123 |
$ 49,163 |
$ 44,998 |
$ 75,614 |
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PARKER DRILLING COMPANY |
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Reconciliation of Non-Routine Items * |
|||||
(Unaudited) |
|||||
(Dollars in Thousands, except Per Share) |
|||||
Three Months Ending |
Twelve Months Ending |
||||
December 31, 2010 |
December 31, 2010 |
||||
Net loss attributable to controlling interest |
$ (13,409) |
$ (14,461) |
|||
Earnings per diluted share |
$ (0.12) |
$ (0.13) |
|||
Adjustments: |
|||||
Extinguishment of debt |
- |
7,209 |
|||
Provision for the reduction in carrying value |
1,952 |
1,952 |
|||
U.S. regulatory investigations / legal matters** |
460 |
5,895 |
|||
Total adjustments |
$ 2,412 |
$ 15,056 |
|||
Tax effect of pre-tax non-routine adjustments |
(844) |
(5,270) |
|||
Kazakhstan tax audit assessment |
13,304 |
13,304 |
|||
Net non-routine adjustments |
$ 14,872 |
$ 23,090 |
|||
Adjusted net income attributable to controlling interest |
$ 1,463 |
$ 8,629 |
|||
Adjusted earnings per diluted share |
$ 0.01 |
$ 0.08 |
|||
Three Months Ending |
Twelve Months Ending |
||||
December 31, 2009 |
December 31, 2009 |
||||
Net income (loss) attributable to controlling interest |
$ (4,324) |
$ 9,267 |
|||
Earnings per 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 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 (loss) attributable to controlling interest |
$ (506) |
$ 16,467 |
|||
Adjusted earnings per diluted share |
$ (0.00) |
$ 0.14 |
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* |
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. |
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** |
Amended to include comparable expenses in all periods. |
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SOURCE Parker Drilling
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