Parker Drilling Third Quarter 2007 EBITDA Increases 39% to $74 Million
Parker Drilling reported strong financial and operating results for the third quarter 2007.
Robert L. Parker Jr., chairman and chief executive officer of Parker Drilling, said: "All three of our operating segments turned in excellent performances during the third quarter. As forecast, these results were driven by dramatically increased contributions from our international operations and a record quarter for both Quail Tools and our U.S. barge rig operations."
For the three months ended September 30, 2007, Parker reported earnings of $22.7 million, or $0.20 per diluted share, on revenues of $172.2 million for the third quarter ended September 30, 2007, compared to revenues of $146.8 million and net income of $18.6 million or $0.17 per diluted share for the third quarter of 2006. Net income in the third quarter of 2007 included net expense of $1.6 million or $0.02 per diluted share, which was the result of $2.4 million of debt extinguishment cost, $1.1 million provision for carrying value and a non-cash credit to tax expense of $0.5 million 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").
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $74.2 million for the third quarter of 2007, 39 % higher than the $53.2 million reported in the third quarter of 2006. Higher dayrates and utilization resulted in a seven % EBITDA improvement for Parker's U.S. Gulf of Mexico barge rigs over the prior year's quarter. Quail Tools, Parker's drilling and production rental tools subsidiary, also achieved record EBITDA of $20.9 million, which topped the record set in the third quarter of 2006. For the first nine months of 2007, total EBITDA was $192.1 million, a 25 % increase over the $153.3 million for 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.)
For the first nine months of 2007, Parker reported revenues of $473.7 million and net income of $69.5 million or $0.63 per diluted share compared to revenues of $440.1 million and net income of $43.9 million or $0.41 per diluted share for the first nine months of 2006. Included in 2007 results is an after-tax gain of $0.07 per diluted share from the sale of two workover barge rigs in January, non-cash FIN 48 charges of $0.05 per diluted share and after-tax charges of $0.02 per diluted share for debt extinguishment and provision for carrying value. Included in 2006 results was net income of $0.02 per diluted share for gains recorded on the disposition of two Nigerian barges and US barge rig 57, offset by debt extinguishment costs.
Capital expenditures for the nine months ended September 30, 2007 totaled $191.4 million. Total debt increased to $354 million due to the issuance of $125 million of Convertible Notes and subsequent redemption of $100 million of our Floating Rate notes. The Company's cash, cash equivalents and marketable securities totaled $67.0 million at September 30, 2007.
Average utilization for barge rigs drilling in the Gulf of Mexico transition zone for the third quarter 2007 was 83 %, up from the 72 % reported for the third quarter 2006 and the 74 % reported for the second quarter 2007. Current barge rig utilization is 81 %. The Company's deep drilling barge dayrates in the Gulf of Mexico were up approximately $2,100 per day from the third quarter 2006, but decreased to $47,900 from the record level of $51,600 per day posted during the second quarter 2007. (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 third quarter 2007 increased to 75 %, up from the 71 % reported for the second quarter 2007 and 55 % in the third quarter 2006. Current international utilization is 82 % and is expected to further increase during 2007 as rigs continue to reposition to new contracts.
Parker continued, "Internationally, we began to realize the substantial benefits of repositioning our international fleet to long-term contracts with strong margins, and we anticipate this performance to continue, as demonstrated in today's announcement of new contracts in Mexico and Kazakhstan.
"North Africa/Middle East is a strategic, long-term growth market for us and the scope of our Saudi Arabian joint venture is significant. By early next year, we expect to have six rigs working under three-year initial commitments for drilling with the option to extend to a fourth year. The joint venture, however, has experienced delays and cost overruns during the construction and commissioning phase of the project and as a result, we recognized a $1.1 million non-cash charge. We also plan to invest an additional $20 to $25 million to finish construction and commissioning of the rigs and expect to have all six rigs operational by the second quarter of 2008, solidifying our initial presence in this strategic market.
"Quail Tools quickly rebounded from a flat second quarter with record- breaking third quarter results. The $50 million expansion of Quail was completed during the third quarter, and results reflect added rental tools and the impact of Quail's new facility in Texarkana, Texas. We continue to remain confident in the growth of this segment.
"We expect that fourth quarter and early 2008 contributions from our U.S. segment will remain substantial but slightly lower than previous quarters due to a moderate decline in dayrates and utilization, as one of our deep barge rigs was down in October and some intermediate barge rigs may experience gaps between contracts in the fourth quarter. However, all of our deep barge rigs are now committed through the remainder of 2007.
"Demand is strong for our brand of high-performance drilling solutions that reduce the total cost of drilling and enable our customers to explore and develop oil and gas reserves in frontier environments. Looking ahead to the remainder of this year and into 2008, I am confident we will continue to deliver strong returns across our operating segments and execute our strategic growth plan."