Parker Drilling First Quarter 2007 Net Income Increases 162%
HOUSTON, May 8 /PRNewswire-FirstCall/ — Parker Drilling Company , a global drilling contractor and service provider, today reported strong financial and operating results for the first quarter 2007 as net income increased 162 percent and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 23 percent over the first quarter 2006.
First Quarter Earnings and Financial Highlights
For the three months ended March 31, 2007, Parker posted net income of $30.0 million, or $0.27 per diluted share, on revenues of $151.3 million, compared to revenues of $147.3 million and net income of $11.5 million, or $0.11 per diluted share, for the first quarter 2006. Net income in the first quarter 2007 included net non-routine income of $0.07 per diluted share, or $8.2 million, relating to the gain on the sale of two workover barge rigs in January. In addition, Parker recognized a non-cash charge to tax expense of $1.9 million, or $0.02 per diluted share, for potential interest and exchange rate fluctuations relating to a tax liability recorded on January 1, 2007, associated with the adoption of the Financial Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48″). The first quarter 2006 included $0.01 per diluted share benefit of non-routine items relating to a change in value of derivative instruments. (The details of the non-routine items for the quarter are available on Parker’s website and can be viewed or downloaded by going to “Investor Relations” and then to “Reconciliation of Non-Routine Items.”)
EBITDA was $61.7 million for the first quarter 2007, 23 percent higher than the $50.3 million in the first quarter 2006. Significantly higher dayrates resulted in a 59 percent EBITDA improvement for Parker’s U.S. operations over the first quarter 2006. Quail Tools also showed improvement, with a 12 percent increase from the first quarter 2006. (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.)
Capital expenditures for the three months ended March 31, 2007 totaled $53.0 million. Total debt was $329.2 million, and the Company’s cash, cash equivalents and marketable securities totaled $157.6 million at March 31, 2007.
Average utilization for the Gulf of Mexico barge rigs for the first quarter 2007 was 73 percent, the same as reported for the first quarter 2006 and higher than the 68 percent reported for the fourth quarter 2006. Current barge rig utilization is 65 percent. The Company’s deep drilling barge dayrates in the Gulf of Mexico continued to experience record levels, averaging $51,600 per day during the first quarter 2007, up approximately 37 percent, or $13,900 per day, from the first quarter 2006 and up $2,100 per day from the fourth quarter 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.”)
The average utilization of international land rigs for the first quarter 2007 was 66 percent, up 20 percent from the 46 percent reported for the fourth quarter 2006, but lower than the 84 percent in the first quarter 2006. Current international utilization, including contracts for three rigs announced today, is 75 percent and is expected to further increase during 2007 as rigs continue to reposition between contracts.
Quail Tools, Parker Drilling’s drilling and production rental tools subsidiary, continued its outstanding performance as it recorded EBITDA of $18.8 million in the first quarter 2007, up $2.0 million from the first quarter 2006. The expansion of Quail is well underway as equipment is being delivered to Quail’s new facility in Texarkana, Texas, which opened on April 2. The new facility provides increased coverage of the Barnett, Fayetteville and Woodford shale areas in East Texas, Arkansas and Oklahoma.
Summary
Robert L. Parker Jr., Chairman, President and Chief Executive Officer of Parker Drilling, said: “We continue to focus on the execution of our strategic growth plan, as we delivered two new international land rigs to Algeria and today announced three-year contracts for two new rigs in Mexico and a two-year contract for Rig 230 in Turkmenistan. Once these rigs are delivered to Mexico, we will have five land rigs and one barge rig operating in Mexico, all under long-term contracts.”
“Looking ahead, we expect increasing contributions from our international segments as we continue to focus on our international markets,” said Parker. “Domestically, we experienced steady demand for our preferred barge rigs in our U.S. Gulf of Mexico transition zone market. We view recent softening in the U.S. Gulf of Mexico as a reflection of the uncertainty in the U.S. gas market. Although this uncertainty has reduced rates from historic highs, we believe that there is sufficient demand to generate strong financial results from our domestic barge fleet through 2007. Finally, we also expect continued outstanding performance from our rental tools segment, as the benefits of our organic expansion and capital investment in Quail Tools are realized. Importantly, we experienced no lost-time accidents during the quarter. Safety is essential to recruiting and retaining the best people. Parker’s preferred drilling solutions deliver a lower total cost of drilling through efficient, safe operations and drilling quality wells. We expect our competitive advantage to drive continued improvements in utilization and profits into 2007.”
Parker has scheduled a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) May 8, 2007 to discuss first quarter 2007 results. Those interested in participating in the call may dial in at (303) 262-2138. The conference call replay can be accessed from May 8 through May 15 by dialing (800) 405-2236 and using the access code 11088402#. 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 demand for drilling and customer spending, competitive advantages including cost effective integrated solutions, future technological innovation, future operating results of the Company’s rigs and rental tool operations, capital expenditures, expansion and growth opportunities, asset sales, successful negotiation 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. 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, 2006. 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 March 31, 2007 2006 (Dollars in Thousands) DRILLING AND RENTAL REVENUES U.S. Drilling $61,624 $40,253 International Drilling 59,674 79,830 Rental Tools 29,975 27,251 TOTAL DRILLING AND RENTAL REVENUES 151,273 147,334 DRILLING AND RENTAL OPERATING EXPENSES U.S. Drilling 26,761 18,259 International Drilling 45,783 62,575 Rental Tools 11,163 10,470 Depreciation and Amortization 18,059 16,957 TOTAL DRILLING AND RENTAL OPERATING EXPENSES 101,766 108,261 TOTAL DRILLING AND RENTAL OPERATING INCOME 49,507 39,073 General and Administrative Expense (5,888) (5,702) Gain on Disposition of Assets, Net 16,404 448 TOTAL OPERATING INCOME 60,023 33,819 OTHER INCOME AND (EXPENSE) Interest Expense (6,330) (9,101) Change in Fair Value of Derivative Position (381) 813 Interest Income 1,784 1,406 Other Income (Expense) – Net (993) (983) TOTAL OTHER INCOME AND (EXPENSE) (5,920) (7,865) INCOME BEFORE INCOME TAXES 54,103 25,954 INCOME TAX EXPENSE Current Tax Expense 22,012 5,563 Deferred Tax Expense 2,097 8,933 TOTAL INCOME TAX EXPENSE 24,109 14,496 NET INCOME $29,994 $11,458 EARNINGS PER SHARE – BASIC Net Income $0.28 $0.11 EARNINGS PER SHARE – DILUTED Net Income $0.27 $0.11 AVERAGE COMMON SHARES OUTSTANDING Basic 107,704,763 104,469,893 Diluted 109,425,555 106,003,562 PARKER DRILLING COMPANY AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Unaudited) March 31, December 31, 2007 2006 ASSETS (Dollars in Thousands) CURRENT ASSETS Cash and Cash Equivalents $74,124 $92,203 Marketable Securities 83,493 62,920 Accounts and Notes Receivable, Net 123,229 112,359 Rig Materials and Supplies 15,957 15,000 Deferred Costs 5,468 6,662 Deferred income taxes 17,307 17,307 Other Current Assets 11,792 11,123 TOTAL CURRENT ASSETS 331,370 317,574 PROPERTY, PLANT AND EQUIPMENT, NET 471,077 435,473 OTHER ASSETS Goodwill 100,315 100,315 Deferred Taxes — 13,405 Other Assets 27,671 34,534 TOTAL OTHER ASSETS 127,986 148,254 TOTAL ASSETS $930,433 $901,301 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Current Portion of Long-Term Debt $— $— Accounts Payable and Accrued Liabilities 98,891 101,903 TOTAL CURRENT LIABILITIES 98,891 101,903 LONG-TERM DEBT 329,206 329,368 LONG-TERM DEFERRED TAXES 48,982 — OTHER LIABILITIES 16,244 10,931 STOCKHOLDERS’ EQUITY 437,110 459,099 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $930,433 $901,301 Current Ratio 3.35 3.12 Total Long-Term Debt as a Percent of Capitalization 43% 42% Book Value Per Common Share $3.94 $4.17 PARKER DRILLING COMPANY AND SUBSIDIARIES Selected Financial Data (Unaudited) Three Months Ended March 31 December 2007 2006 2006 DRILLING AND RENTAL REVENUES (Dollars in Thousands) U.S. Offshore Drilling $55,152 $40,253 $50,830 U.S. Land Drilling 6,472 — 5,098 International Land Drilling 51,875 66,126 49,146 International Offshore Drilling 7,799 13,704 9,663 Rental Tools 29,975 27,251 31,593 Total Drilling and Rental Revenues 151,273 147,334 146,330 DRILLING AND RENTAL OPERATING EXPENSES U.S. Offshore Drilling 22,136 18,259 22,696 U.S. Land Drilling 4,625 — 2,889 International Land Drilling 40,694 50,414 41,909 International Offshore Drilling 5,089 12,161 7,696 Rental Tools 11,163 10,470 12,666 Drilling and Rental Operating Expenses 83,707 91,304 87,856 DRILLING AND RENTAL OPERATING INCOME U.S. Offshore Drilling 33,016 21,994 28,134 U.S. Land Drilling 1,847 — 2,209 International Land Drilling 11,181 15,712 7,237 International Offshore Drilling 2,710 1,543 1,967 Rental Tools 18,812 16,781 18,927 Depreciation and Amortization (18,059) (16,957) (17,605) Total Drilling and Rental Operating Income 49,507 39,073 40,869 General and Administrative Expense (5,888) (5,702) (6,773) Gain on Disposition of Assets, Net 16,404 448 672 TOTAL OPERATING INCOME $60,023 $33,819 $34,768 Marketable Rig Count Summary As of March 31, 2007 Total U.S. Land Rigs 4 U.S. Gulf of Mexico Barge Rigs Workover 3 Intermediate 4 Deep 10 Total U.S. Gulf of Mexico Barge Rigs 17 International Land Rigs Asia Pacific 9 Africa – Middle East 2 Latin America 3 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 March 31, December 31, September 30, 2007 2006 2006 Income (Loss) from Continuing Operations $29,994 $37,168 $18,639 Adjustments: Income Tax Expense 24,109 (5,954) 13,173 Total Other Income and Expense 5,920 3,554 8,741 Loss/(Gain) on Disposition of Assets, Net (16,404) (672) (4,328) Depreciation and Amortization 18,059 17,605 16,993 Provision for Reduction in Carrying Value — — — Adjusted EBITDA $61,678 $51,701 $53,218 Adjusted EBITDA (Unaudited) Three Months Ending June 30, March 31, December 31, 2006 2006 2005 Income (Loss) from Continuing Operations $13,761 $11,458 $56,707 Adjustments: Income Tax Expense 14,694 14,496 (39,087) Total Other Income and Expense 5,731 7,865 10,251 Loss/(Gain) on Disposition of Assets, Net (2,125) (448) (3,185) Depreciation and Amortization 17,715 16,957 16,619 Provision for Reduction in Carrying Value — — 2,584 Adjusted EBITDA $49,776 $50,328 $43,889 Adjusted EBITDA (Unaudited) Three Months Ending September 30, June 30, March 31, 2005 2005 2005 Income (Loss) from Continuing Operations $18,073 $20,194 $3,838 Adjustments: Income Tax Expense 2,165 3,486 4,852 Total Other Income and Expense 9,627 15,140 9,877 Loss/(Gain) on Disposition of Assets, Net (5,943) (15,898) (552) Depreciation and Amortization 16,563 17,146 16,876 Provision for Reduction in Carrying Value 2,300 — — Adjusted EBITDA $42,785 $40,068 $34,891
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Parker Drilling Company
CONTACT: David Tucker of Parker Drilling Company, +1-281-406-2370
Web site: http://www.parkerdrilling.com/