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Parker Drilling Reports Third Quarter Earnings; Operating Results Increase 24 Percent

Posted on: Wednesday, 1 November 2006, 09:00 CST

HOUSTON, Nov. 1 /PRNewswire-FirstCall/ -- Parker Drilling Company today reported earnings of $18.6 million, or $0.17 per diluted share, on revenues of $146.8 million for the third quarter ended September 30, 2006, compared to revenues of $127.9 million and net income of $18.1 million or $0.18 per diluted share for the third quarter of 2005. Net income in the third quarter of 2006 included net non-routine income of $0.4 million and non- cash deferred taxes of $12.0 million or $0.11 per diluted share whereas the third quarter of 2005 included net non-routine income of $3.2 million or $0.03 per diluted share and no deferred taxes.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $53.2 million for the third quarter of 2006, 24 percent higher than the $42.8 million reported in the third quarter of 2005. Significantly higher dayrates resulted in a 68 percent EBITDA improvement for Parker's U.S. Gulf of Mexico barge rigs over the prior year's quarter. Quail Tools also showed an improvement, with a 51 percent increase from the prior year's quarter. For the first nine months of 2006, EBITDA was $153.3 million, a 30 percent increase over the $117.7 million for 2005. (The details of the EBITDA calculation, a non-GAAP financial measure, for the current and prior eight quarters are defined and reconciled later in this press release to their most directly comparable GAAP financial measure.)

For the first nine months of 2006, Parker Drilling reported revenues of $440.1 million and net income of $43.9 million or $0.41 per diluted share compared to revenues of $382.1 million and net income of $42.2 million or $0.43 per diluted share for the first nine months of 2005. Included in 2006 results are income of $0.02 per diluted share from non-routine items and $0.29 per share of non-cash deferred tax expense compared to income from non-routine items of $0.10 per diluted share and no deferred tax expense in 2005.

The average utilization of international land rigs for the third quarter of 2006 decreased to 55 percent from the 83 percent reported for the third quarter of 2005. This decrease is attributed to ten rigs that completed contracts in Mexico and Turkmenistan earlier this year. However, fourth quarter land rig revenue will increase as five of the ten rigs will commence new, long-term contracts at increased dayrates averaging more than 75 percent above previous contracted terms. The remaining rigs are currently being marketed and are expected to return to work in the fourth quarter and into 2007 at significantly higher dayrates.

Average utilization for the Gulf of Mexico barge rigs for the third quarter of 2006 was 72 percent, compared to 78 percent reported for the third quarter of 2005. The slight decline in utilization is primarily attributable to two deep barge rigs that were in shipyard during the quarter for upgrades and scheduled preventive maintenance. Deep barge rig 54 completed its upgrade program and scheduled preventive maintenance and re-entered the fleet in August under a one-year contract, and deep barge rig 50 will complete its upgrade program in November, and will mobilize for a three-month contract.

The Company's deep drilling barge dayrates in the Gulf of Mexico averaged a record $45,800 per day during the third quarter of 2006, up approximately 53 percent, or $15,900 per day, from the third quarter of 2005 and approximately 13 percent, or $5,400 per day, above the second quarter of 2006. Average dayrates for each classification of barge by quarter are available on Parker's website and can be viewed or downloaded by going to "Investor Relations" and then to "Dayrates - GOM."

Quail Tools, Parker Drilling's drilling and production rental tools subsidiary, continued its outstanding performance as it posted its third consecutive quarterly record with revenues of $32.8 million. In addition to increased market penetration and new customers, results were fueled by new inventory purchased as a result of Parker's 2006 capital expansion program, which significantly increased rental tool availability. Quail's new operating facility in Northeast Texas is on track to open in early 2007, and will provide increased coverage of the Barnett Shale area and Fayetteville Shale area in Arkansas, in addition to the East Texas and Oklahoma markets.

"Parker delivered another solid quarter, posting records in our two U.S. segments and making good progress towards returning rigs to work at significantly improved dayrates in our international markets," said Robert L. Parker Jr., chairman, president and chief executive officer. "Revenues remain steady despite lower international utilization, and will improve significantly as the new contracts commence work.

"We expect to continue to realize strong contributions from the U.S. business segments throughout the remainder of 2006 and into 2007 based on customer feedback and our success in securing term contracts for our deep barges.

"As we progress in our five-year strategic plan that includes growing a fleet of preferred drilling rigs, focusing on markets that have long-term exploration and development opportunities, and growing the Company's rental tool business, we are excited about the many opportunities created by the plan for all of our business segments," Parker concluded.

Capital expenditures for the nine months ended September 30, 2006 were $129.0 million. Total debt was $329.5 million at September 30, 2006, and the Company's cash balance, including marketable securities, was $172.3 million.

Operating Segment Updates * An additional land rig previously operating in Mexico was awarded a one-year contract for operations in South Texas, also with a dayrate increase in excess of the 75 percent average noted last quarter. Of the seven land rigs formerly in Mexico, four have secured long-term commitments at current market rates, which are significantly higher than dayrates under contracts recently completed. * Deep barge rig 77, nearing the end of construction, is under contract and is expected to enter the fleet in December. * Two of the Company's new 2,000 horsepower land rigs have been contracted for work in Algeria by Sonatrach. The rigs are scheduled for delivery in the fourth quarter, and should begin operating under the three-year contract during the first quarter of 2007.

Parker has scheduled a conference call at 10 a.m. CST (11 a.m. EST) November 1, 2006 to discuss third quarter 2006 results. Those interested in participating in the call may dial in at (303) 262-2138. The conference call replay can be accessed from November 1 through November 8 by dialing (303) 590-3000 and using the access code 11073563#. Alternatively, the call can be accessed live through the Company's website at http://www.parkerdrilling.com/ and will be archived on the site for 12 months.

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 bidding activity, future operating results of the Company's rigs and rental tool operations, capital expenditures, expansion and growth opportunities, asset sales, successful negotiation of contracts, future effective tax rates 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. 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, and in particular, the report on Form 10-K for the year ended December 31, 2005. 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 Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 (Dollars in Thousands) (Dollars in Thousands) DRILLING AND RENTAL REVENUES U.S. Drilling $52,347 $33,863 $135,297 $92,090 International Drilling 61,605 70,114 214,407 220,587 Rental Tools 32,831 23,928 90,401 69,425 TOTAL DRILLING AND RENTAL REVENUES 146,783 127,905 440,105 382,102 DRILLING AND RENTAL OPERATING EXPENSES U.S. Drilling 20,944 15,178 58,228 48,404 International Drilling 52,280 53,147 171,506 168,647 Rental Tools 12,349 10,352 33,788 27,488 Depreciation and Amortization 16,993 16,563 51,665 50,585 TOTAL DRILLING AND RENTAL OPERATING EXPENSES 102,566 95,240 315,187 295,124 DRILLING AND RENTAL OPERATING INCOME 44,217 32,665 124,918 86,978 General and Administrative Expense (7,992) (6,443) (23,261) (19,819) Provision for change in Carrying Value of Certain Assets --- (2,300) --- (2,300) Gain on Disposition of Assets, Net 4,328 5,943 6,901 22,393 TOTAL OPERATING INCOME 40,553 29,865 108,558 87,252 OTHER INCOME AND (EXPENSE) Interest Expense (7,923) (9,825) (25,223) (31,640) Change in Fair Value of Derivative Position (1,029) 1,457 166 1,526 Loss on Extinguishment of Debt (1,910) (1,901) (1,912) (6,628) Other Income (Expense) - Net 2,121 642 4,632 2,098 TOTAL OTHER INCOME AND (EXPENSE) (8,741) (9,627) (22,337) (34,644) INCOME BEFORE INCOME TAXES 31,812 20,238 86,221 52,608 INCOME TAX EXPENSE Current Tax Expense 1,166 2,165 10,692 10,503 Deferred Tax Expense 12,007 --- 31,671 --- TOTAL INCOME TAX EXPENSE 13,173 2,165 42,363 10,503 INCOME FROM CONTINUING OPERATIONS 18,639 18,073 43,858 42,105 Discontinued Operations, Net of Taxes --- (6) --- 71 NET INCOME $18,639 $18,067 $43,858 $42,176 EARNINGS PER SHARE - BASIC Income From Continuing Operations $0.17 $0.19 $0.41 $0.44 Discontinued Operations, Net of Taxes $--- $--- $--- $--- Net Income $0.17 $0.19 $0.41 $0.44 EARNINGS PER SHARE - DILUTED Income From Continuing Operations $0.17 $0.18 $0.41 $0.43 Discontinued Operations, Net of Taxes $--- $--- $--- $--- Net Income $0.17 $0.18 $0.41 $0.43 AVERAGE COMMON SHARES OUTSTANDING Basic 107,233,881 96,053,414 106,272,123 95,568,331 Diluted 108,211,580 98,022,378 107,766,841 97,163,125 PARKER DRILLING COMPANY AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Unaudited) Sept. 30, 2006 Dec. 31, 2005 ASSETS (Dollars in Thousands) CURRENT ASSETS Cash and Cash Equivalents $84,969 $60,176 Marketable Securities 87,380 18,000 Accounts and Notes Receivable, Net 128,423 104,681 Rig Materials and Supplies 13,593 18,179 Deferred Costs 3,437 4,223 Deferred income taxes 14,841 12,018 Other Current Assets 52,989 64,058 TOTAL CURRENT ASSETS 385,632 281,335 PROPERTY, PLANT AND EQUIPMENT, NET 396,636 355,397 OTHER ASSETS Goodwill 100,315 107,606 Other Assets 21,489 57,282 TOTAL OTHER ASSETS 121,804 164,888 TOTAL ASSETS $904,072 $801,620 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current Portion of Long-Term Debt $--- $--- Accounts Payable and Accrued Liabilities 142,922 150,755 TOTAL CURRENT LIABILITIES 142,922 150,755 LONG-TERM DEBT 329,529 380,015 LONG-TERM DEFERRED TAXES 441 --- OTHER LIABILITIES 12,932 11,021 STOCKHOLDERS' EQUITY 418,248 259,829 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $904,072 $801,620 Current Ratio 2.70 1.87 Total Long-Term Debt as a Percent of Capitalization 44% 59% Book Value Per Common Share $3.84 $2.66 PARKER DRILLING COMPANY AND SUBSIDIARIES Selected Financial Data (Unaudited) Three Months Ended September 30 June 30 2006 2005 2006 DRILLING AND RENTAL REVENUES (Dollars in Thousands) U.S. Drilling $52,347 $33,863 $42,697 International Land Drilling 48,146 54,584 59,028 International Offshore Drilling 13,459 15,530 13,944 Rental Tools 32,831 23,928 30,319 Total Drilling and Rental Revenues 146,783 127,905 145,988 DRILLING AND RENTAL OPERATING EXPENSES U.S. Drilling 20,944 15,178 19,814 International Land Drilling 40,491 39,734 46,350 International Offshore Drilling 11,789 13,413 11,504 Rental Tools 12,349 10,352 10,969 Drilling and Rental Operating Expenses 85,573 78,677 88,637 DRILLING AND RENTAL OPERATING INCOME U.S. Drilling 31,403 18,685 22,883 International Land Drilling 7,655 14,850 12,678 International Offshore Drilling 1,670 2,117 2,440 Rental Tools 20,482 13,576 19,350 Depreciation and Amortization (16,993) (16,563) (17,715) Total Drilling and Rental Operating Income 44,217 32,665 39,636 General and Administrative Expense (7,992) (6,443) (7,575) Provision for Reduction in Carrying Value of Certain Assets --- (2,300) --- Gain on Disposition of Assets, Net 4,328 5,943 2,125 TOTAL OPERATING INCOME $40,553 $29,865 $34,186 Marketable Rig Count Summary As of September 30, 2006 Total U.S. Land Rigs 2 U.S. Gulf of Mexico Barge Rigs Workover 5 Intermediate 4 Deep 10 Total U.S. Gulf of Mexico Barge Rigs 19 International Land Rigs Asia Pacific 9 Africa - Middle East 1 Mexico 4 CIS 8 Total International Land Rigs 22 International Barge Rigs Mexico 1 Caspian Sea 1 Total International Barge Rigs 2 Total Marketable Rigs 45 Adjusted EBITDA (Unaudited) Three Months Ending September 30, June 30, March 31, 2006 2006 2006 Income (Loss) from Continuing Operations $18,639 $13,761 $11,458 Adjustments: Income Tax Expense 13,173 14,694 14,496 Total Other Income and Expense 8,741 5,731 7,865 Gain on Disposition of Assets, Net (4,328) (2,125) (448) Depreciation and Amortization 16,993 17,714 16,957 Provision for Reduction in Carrying Value --- --- --- Adjusted EBITDA $53,218 $49,775 $50,328 Adjusted EBITDA (Unaudited) Three Months Ending December 31, September 30, June 30, 2005 2005 2005 Income (Loss) from Continuing Operations $56,707 $18,073 $20,194 Adjustments: Income Tax Expense (39,087) 2,165 3,486 Total Other Income and Expense 10,251 9,627 15,140 Gain on Disposition of Assets, Net (3,185) (5,943) (15,898) Depreciation and Amortization 16,619 16,563 17,146 Provision for Reduction in Carrying Value 2,584 2,300 --- Adjusted EBITDA $43,889 $42,785 $40,068 Adjusted EBITDA (Unaudited) Three Months Ending March 31, December 31, Sept. 30, 2005 2004 2004 Income (Loss) from Continuing Operations $3,838 $(2,147) $(24,802) Adjustments: Income Tax Expense 4,852 3,001 4,542 Total Other Income and Expense 9,877 10,698 22,027 Gain on Disposition of Assets, Net (552) (2,328) (333) Depreciation and Amortization 16,876 18,642 17,806 Provision for Reduction in Carrying Value --- 6,562 --- Adjusted EBITDA $34,891 $34,428 $19,240

Photo: http://www.newscom.com/cgi-bin/prnh/20050620/PARKERDRILLINGLOGOAP Archive: http://photoarchive.ap.org/PRN Photo Desk, photodesk@prnewswire.com

Parker Drilling Company

CONTACT: investors, David Tucker of Parker Drilling Company,+1-281-406-2370

Web site: http://www.parkerdrilling.com/

Source: PRNewswire-FirstCall

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