Parker Drilling Reports Second Quarter Results
Parker Drilling Company announced a net loss of $11.5 million, or $0.12 per diluted share, on revenues of $97.8 million for the second quarter of 2002. This compares to net income of $2.7 million or $0.03 per diluted share on revenues of $132.9 million for the second quarter of 2001.
For the first six months of 2002, Parker Drilling reported revenues of $194.0 million and a loss before the cumulative effect of a change in accounting principle of $22.6 million, or $0.25 per diluted share. Including the cumulative effect of Parker Drilling's adoption, retroactive to Jan. 1, 2002, of Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," Parker Drilling reported a net loss of $95.7 million or $1.04 per diluted share. For the first six months of 2001, Parker Drilling reported net income of $4.2 million or $0.05 per diluted share on revenues of $247.8 million.
"Utilization in the Gulf of Mexico has improved since the first quarter, and we expect dayrates to follow this trend," said Robert L. Parker Jr., president and chief executive officer. "Our international land rig utilization dropped in this latest quarter primarily due to a change in business strategy by two of our customers. Given worldwide demand for land rigs and the increasing number of bid requests we have received from our customers, we anticipate an increase in utilization toward the end of this year and into 2003."
Utilization of Parker Drilling's Gulf of Mexico rigs is currently 55 percent. Average utilization was 54 percent in the second quarter of 2002 compared to 41 percent in the first quarter of 2002.
Utilization of the company's international land rigs currently is 39 percent. Average utilization was 40 percent in the second quarter of 2002 compared to 47 percent for the first quarter of 2002.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $25.4 million for the second quarter of 2002. This compares to EBITDA of $26.4 million for the first quarter of 2002, and $47.3 million for the second quarter of 2001.
Capital expenditures for the three months and six months ended June 30, 2002, were $15.4 million and $28.1 million, respectively. Total debt was $591.4 million at June 30, 2002, and the company's cash balance was $23.4 million.
During the second quarter of 2002, Parker Drilling completed the analysis required by SFAS No. 142 for the impairment of goodwill. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. The analysis resulted in a determination that goodwill associated with the Gulf of Mexico jackup and platform rigs exceeded estimated fair value, resulting in a non-cash charge of $73.1 million or $0.79 per diluted share. There was no goodwill impairment for the Gulf of Mexico barge rigs, the international barge rigs and rental tools reporting units. In accordance with SFAS No. 142, Parker Drilling has discontinued the amortization of goodwill as of Jan. 1, 2002. The prior year's amortization was $7.5 million. The goodwill balance at June 30, 2002, after giving effect to the goodwill impairment, is $116.0 million.
Utilization and dayrates in the shallow-water segment of the Gulf of Mexico have improved, but not at the pace anticipated by management. This has affected not only the company's barge and jackup rig businesses, but also its rental tool division, Quail Tools. With the slower recovery in the Gulf of Mexico and decreased utilization of international land rigs, management is reducing the guidance ranges on revenues, EBITDA and earnings that had been announced at previous conference calls. Management now anticipates that revenues for the year will approximate $400 million. Where EBITDA had been projected to fall between $125 and $150 million, management now anticipates a range of $100 to $115 million. With this as a basis, the loss before the $73.1 million change in accounting principle could range from $40 to $50 million. Overall financial results for the third quarter are expected to approximate the results reported for the second quarter.