Parker Drilling reported results for the three-month period ended March 31, 2010. The Company's results for the quarter included a net loss of $2.1 million or $0.02 per diluted share on revenues of $157.6 million, compared with net income of $2.1 million or $0.02 per diluted share on revenues of $173.9 million for the 2009 first quarter. Excluding the effects of non-routine items the Company reported net income of $2.6 million or $0.02 per diluted share compared with similarly adjusted 2009 first quarter net income of $5.6 million or $0.05 per diluted share. Adjusted EBITDA excluding non-routine items was $37.9 million compared with $45.0 million for the prior year’s first quarter.
Compared with the fourth quarter of 2009, the Company's net income, adjusted for non-routine items, was higher by $3.1 million or $0.03 per diluted share and adjusted EBITDA was $3.4 million higher. Revenues declined 10 percent compared to the preceding quarter.
"Our performance in the first quarter reflects improvements in U.S. drilling markets and continued sluggishness in international drilling contract awards and renewals. In our U.S. businesses we are benefiting from actions taken to enhance our strategic position," said Parker Drilling chief executive officer David Mannon. "Our barge drilling business had a significant upturn in revenues and earnings this past quarter, compared with the prior year’s first quarter. In 2009 we decided to 'ready-stack' our Gulf of Mexico barge rigs. This strategy enabled us to capture a large portion of newly-contracted work by providing fast back-to-work response times while keeping costs in line with market conditions. Parker’s rental tools business continued to benefit from the strategic positioning of stores in the active shale plays and recent investments in tubular inventory. These enabled the business to leverage the earnings impact of recovering rig activity and reductions in price discounting." Mr. Mannon went on to say, "The effects of the 2009 reduction in worldwide E&P spending continue to contribute to the lower international utilization we have today."
First Quarter Highlights
"Recent trends in U.S. land drilling, the sustained level of oil prices and an expected increase in worldwide exploration and production spending are encouraging factors in our markets. Though natural gas fundamentals present a risk to sustained growth in demand from U.S. land activity, we believe the shift to more oil-directed drilling may mitigate this," said Mr. Mannon. "Overall, we believe these trends will contribute to renewed growth for Parker. Demand for rental tools continues to improve and price discounting has eased. Our barge drilling activity has picked up and stabilized. In many of our international drilling markets contract tender activity is improving and should provide increased deployment opportunities for our rig fleet during the year. Our project management business continues to grow its opportunity list of longer-term design, construction and operating projects. We are continuing to develop each of our businesses in line with its strategy, and I expect the strategies we have deployed to result in improving operating performance as the year progresses," he concluded.
First Quarter Review
Results for the three months ended March 31, 2010, included the impact of several non-routine items that decreased net income by $4.6 million or $0.04 per diluted share. Included in non-routine items is $3.9 million, pre-tax, of expense related to the ongoing Department of Justice and Securities and Exchange Commission investigations and Parker's internal review regarding possible violations of the Foreign Corrupt Practices Act and other laws. Also included in non-routine items is $3.2 million, pre-tax, of debt extinguishment costs related to the portion of the Company's 9.625% senior notes which were tendered and exchanged in the quarter. The remaining non-tendered 9.625% senior notes were redeemed in the second quarter. The results for the 2009 first quarter included non-routine, net after-tax expense of $3.5 million or $0.03 per diluted share. Details of the non-routine items are provided in the attached financial tables.
Parker's revenues for the 2010 first quarter declined to $157.6 million or by 9 percent from the 2009 first quarter revenues of $173.9 million. The Company's 2010 first quarter gross margin, before depreciation and amortization expense, declined to $44.1 million or by 16 percent from the 2009 first quarter gross margin of $52.7 million, while gross margin as a percentage of revenues was 28 percent compared with 30 percent for the 2009 first quarter.
Cash Flow and Capitalization
Capital expenditures for the 2010 first quarter were $57.9 million, including $41.2 million for the construction of Parker's two newbuild arctic rigs for Alaska and $9.3 million for tubular goods and other rental equipment.
During the first quarter Parker issued $300 million of senior debt at an effective rate of 9.125% due in 2018. The proceeds are being used to refinance the Company’s outstanding $225 million of 9.625% senior notes and to repay borrowings under its revolving credit facility. Included in the current portion of long-term debt at March 31, 2010 was $130.0 million of 9.625% senior notes which were called in March and retired in April.
Most Popular Articles
From the Career Center
Jobs that may interest you