Parker Drilling Nearly Triples First Quarter Earnings
Parker Drilling Company (NYSE: PKD) announced its financial results for the three months ended March 31, 2006. The Company reported that first quarter 2006 net income increased to $11.5 million, or $0.11 per diluted share, from 2005 first quarter net income of $3.9 million, or $0.04 per diluted share. Net income for the first quarter of 2006 includes income tax expense of $14.5 million, of which $8.9 million, or $0.08 per diluted share, was non-cash deferred tax expense compared to no deferred tax expense in the $4.9 million of income tax expense in the first quarter of 2005. Revenues for the first quarter of 2006 increased 23 percent to $147.3 million from 2005 first quarter revenues of $120.2 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $50.3 million for the first quarter of 2006 and was 44 percent higher than the $34.9 million reported in the first quarter of 2005 and 15 percent higher than the $43.9 million reported in the fourth quarter of 2005. This marks the sixth consecutive quarter of EBITDA improvement and is the highest quarterly EBITDA in 25 years. (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.)
The average utilization of international land rigs for the first quarter of 2006 increased to 84 percent, significantly higher than the 67 percent reported for the first quarter of 2005. Average utilization for the Gulf of Mexico barge rigs for the first quarter of 2006 was 73 percent, compared to 77 percent reported for the first quarter of 2005. This decline in utilization is mainly due to barge rig 12's shipyard program which is scheduled to be completed within the next two weeks. The Company's deep drilling barge dayrates in the Gulf of Mexico during the first quarter of 2006 averaged $37,700, up approximately 50 percent, or $12,700 per day, from the first quarter of 2005 and approximately 10 percent, or $3,400 per day, above the fourth quarter of 2005.
Quail Tools, Parker Drilling's specialized drilling and production rental tools subsidiary, continued its outstanding performance as it posted a quarterly record with revenues of $27.3 million. This follows Quail's record- setting 2005, in which it posted $94.8 million in total revenues, the highest in Quail Tools' history. Quail Tools opened a new service area in the Williston Basin in the first quarter of 2006, and additional expansion is scheduled as Quail plans to open a new operating facility located in Northeast Texas, covering the Barnett Shale area and Fayetteville Shale area in Arkansas.
The Company also announced today that its barge rig 76 was awarded a one- year term contract beginning in June for work along the Southeast Louisiana coast by McMoRan Exploration, where it is currently drilling ultra-deep gas prospects.
"Parker Drilling delivered solid revenue and earnings per share results for the quarter," said Robert L. Parker Jr., chairman, president and chief executive officer. "We expect to continue to realize strong near-term contributions from Quail Tools and increased dayrates in our U.S. Gulf of Mexico transition zone market. The benefits from the Quail Tools expansion and rising international dayrates, contract rollovers and increasing activity are expected to contribute significantly to results throughout the rest of the year."
Capital expenditures for the first quarter were $35.9 million. Total debt was $379.9 million at March 31, 2006, and the Company's cash balance was $186.6 million.
Business highlights during the first quarter included: * The formation of a joint venture company between Parker Drilling Company and Abdullah Rasheed Al-Rushaid Company for Drilling Oil and Gas Limited, which will perform four drilling contracts, each with a term of three years with a one-year option, for Saudi Aramco. * In January, Parker Drilling completed a public offering of 8,900,000 shares of its common stock, proceeds of which totaled approximately $100 million. The Company is using the net proceeds, together with cash on hand, to invest in the expansion of its rig fleet and Quail Tools. * Land rig 121 was awarded a one-year contract by Golden Gate Petroleum, Ltd., for work on Padre Island, Texas. Work will begin in June following completion of the rig's current contract in Mexico. The contract also includes options for four, six-month extension periods. * Parker land rig 225 mobilized from an inactive status in Indonesia for a two-well contract with Tullow Bangladesh Ltd. in Bangladesh. The well program is expected to last for approximately six months, and the contract includes options for two additional wells. * Barge rig 12 was awarded three consecutive two-month contracts by Gulfport Energy Corporation for work along the Southwest Louisiana coast. Rig 12B is currently being upgraded from a workover to deep drilling barge rig and is expected to depart the shipyard in mid-May.
"We are off to a good start in an important year for the Company," Parker
said. "Based on the strong first quarter financial results and our continued
positive outlook, we expect to finish the year at least at the high end of our
previous 2006 diluted earnings per share guidance."