Parker Drilling Reports First Quarter Results
For the quarter ended March 31, 2003, Parker Drilling reported revenues of $95.1 million and a net loss of $16.2 million, or $0.17 per share. For the quarter ended March 31, 2002, Parker Drilling reported a net loss before cumulative effect of change in accounting principle of $11.1 million or $0.12 per diluted share on revenues of $106.4 million. Including the cumulative effect of the change in accounting principle, Parker Drilling reported a first quarter 2002 net loss of $84.2 million or $0.91 per share. Effective the first quarter of 2002, the company adopted SFAS No. 142, "Goodwill and Other Intangible Assets" resulting in an impairment of goodwill of $73.1 million or $0.79 per share.
Drilling and rental gross margins were $30.1 million for the first quarter of 2003. This compares to drilling and rental gross margins of $37.0 million for the fourth quarter of 2002, and $32.1 million for the first quarter of 2002.
The company's international activities continue to be led by its operation in Kazakhstan fueled by the January resumption of the Tengizchevroil drilling program that was suspended during the fourth quarter of 2002. In addition, in early April Parker signed a one-well extension to its contract for Rig 257 operating in the Caspian Sea for a consortium managed by AGIP KCO.
Two of the company's three rigs under contract in Nigeria had drilling suspended during the first quarter of 2003 due to conflicts in the area. The company is working with its customers in Nigeria to resume drilling. In addition, the company's management contract in Kuwait was interrupted for 30 days in March and April because of the conflict in neighboring Iraq. The company is in the process of resuming its Kuwait operation. While the suspensions in Nigeria and Kuwait resulted in a reduction in revenues, there was no material reduction in gross margin.
Utilization of the company's international land rigs currently is 24 percent. Average utilization was 23 percent in the first quarter of 2003 compared to average utilization of 31 percent for the fourth quarter of 2002. Utilization of Parker Drilling's Gulf of Mexico rigs is currently 52 percent. Average utilization was 52 percent in the first quarter of 2003 compared to an average utilization of 58 percent in the fourth quarter of 2002.
Capital expenditures for the three months ended March 31, 2003, were $6.9 million. Total debt was $588.3 million at March 31, 2003, and the company's cash balance was $84.4 million at the end of the first quarter.
A slower than anticipated market reaction to commodity prices and unstable worldwide events have resulted in a lower than expected number of rigs working and continued pressure on rates. Therefore, Parker management is reducing its guidance for 2003 to a projected loss in diluted earnings per share in the $0.26 to $0.30 range excluding any impact resulting from asset sales.
As previously disclosed, the company is proceeding with its plan to sell assets by mid-year. The company continues to target a $200 million debt reduction from proceeds raised in the process. While there are no assurances that the sale of such assets can be consummated on terms that are acceptable to the company, the company continues to believe it will achieve its target and do so during the second quarter.