Parker Drilling Reports 2016 Third Quarter Results

HOUSTON, Oct. 27, 2016 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the third quarter ended September 30, 2016, including a reported net loss of $46.2 million, or a $0.37 loss per share, on revenues of $97.2 million. 

Third quarter adjusted EBITDA was $5.1 million.

"We are pleased with our third quarter results given the challenging market conditions," said Gary Rich, the Company's Chairman, President and CEO.  "While results were down quarter-on-quarter, they were in line with our expectations. We also saw improvements in some areas of our business.

"Results from our Rentals Tools business improved slightly in the third quarter.  Our rental activity in the U.S. land market increased as drilling activity improved, and this partially offset further declines in our U.S. offshore rentals.  Results from our International Rental Tools segment improved in the third quarter due to the startup of previously delayed contracts and further cost reductions.  In addition, our Drilling Services business benefited from the initial startup of a new operations and maintenance (O&M) contract for the Atlantic Coast, Canada and the addition of a fourth rig under an existing O&M contract on Sakhalin Island, Russia, both of which were awarded in the second quarter.

"We remain focused on cash flow and ended the quarter with $194 million in liquidity including $104 million in cash and $90 million available on our undrawn revolver. Contracted backlog was $421 million at the end of the third quarter compared with $446 million as of June 30, 2016.

"Looking forward, while there are indications market conditions are stabilizing and we may continue to see conditions improve in the near future, our expectations for the pace of the recovery remain guarded.  As we navigate these market conditions, we are well positioned in our target markets and will continue to focus on execution, cash flow and financial discipline," concluded Rich.

Third Quarter Review

Parker Drilling's revenues for the 2016 third quarter, compared with the 2016 second quarter, decreased 7.7 percent to $97.2 million from $105.3 million, operating gross margin excluding depreciation and amortization expense (gross margin) decreased 22.4 percent to $12.5 million from $16.1 million and gross margin as a percentage of revenues was 12.9 percent, compared with 15.3 percent.

Drilling Services

For the Company's Drilling Services business, which is comprised of the U.S. (Lower 48) Drilling and International & Alaska Drilling segments, third quarter revenues decreased 8.6 percent to $66.7 million from $73.0 million for the 2016 second quarter, gross margin decreased 28.8 percent to $9.9 million from $13.9 million, and gross margin as a percentage of revenues was 14.8 percent, compared with 19.0 percent for the prior period.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues were $1.4 million compared with $1.1 million in the 2016 second quarter. Gross margin was a $3.7 million loss as compared with a 2016 second quarter loss of $3.9 million. The increase in revenues and gross margin improvement were primarily the result of slightly higher utilization.

International & Alaska Drilling

International & Alaska Drilling segment revenues were $65.3 million, a 9.2 percent decrease from 2016 second quarter revenues of $71.9 million. Gross margin was $13.6 million, a 23.6 percent decrease from 2016 second quarter gross margin of $17.8 million. Gross margin as a percentage of revenues was 20.8 percent as compared with 24.8 percent in the 2016 second quarter. The decrease in revenues and gross margin were attributable to the completion of a project services engagement early in the third quarter and lower rig utilization.   There were also margin benefits in the second quarter that did not repeat in the third quarter, including a rig contract early termination fee and the release of accruals related to the wind down of operations in certain locations.  Partially offsetting these declines were the start-ups of the new O&M contracts.

Rental Tools Services

Effective July 1, 2016, we report our Rental Tools Services business as two reportable segments: (1) U.S. Rental Tools and (2) International Rental Tools. Third quarter revenues for the Rental Tools Services business decreased 5.6 percent to $30.5 million from $32.3 million for the 2016 second quarter, gross margin increased 18.2 percent to $2.6 million from $2.2 million, and gross margin as a percentage of revenues was 8.5 percent compared with 6.8 percent for the prior period.

U.S. Rental Tools

U.S. Rental Tools segment revenues were $15.0 million, compared with $18.0 million for the 2016 second quarter.  Gross margin was $4.2 million compared with $5.7 million for the 2016 second quarter.  The declines in revenues and gross margin were primarily due to a decline in offshore Gulf of Mexico revenues partially offset by an increase in land revenues.

International Rental Tools

International Rental Tools segment revenues were $15.5 million, compared with $14.3 million for the 2016 second quarter.  Gross margin was a $1.7 million loss compared with a 2016 second quarter loss of $3.5 million.  The increase in revenues and improvement in gross margin were due to increased rental activity associated with both previously delayed new contract start-ups and existing contracts.  Gross margin also benefited from lower operating expenses.

Consolidated

General and Administrative expenses were $7.4 million for the 2016 third quarter, down from $8.0 million for the 2016 second quarter.  The decrease was primarily due to incentive plan adjustments.

Capital expenditures in the third quarter were $4.7 million, and year-to-date through September 30, 2016 were $21.0 million.

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Friday, October 28, 2016, to review third quarter results.  The call will be available by telephone by dialing (+1) (412) 902-0003 and asking for the Parker Drilling Third Quarter Conference Call.  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 and will be available by telephone through November 4, 2016 at (+1) (201) 612-7415, conference ID 13646195.

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 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-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.

Contact: Jason Geach, Vice President, Investor Relations & Corporate Development, (+1) (281) 406-2310, [email protected].

 

 

 

 

 

 

 

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SOURCE Parker Drilling Company