Parker Drilling First Quarter 2007 Net Income Increases 162%
Parker Drilling Company (NYSE: PKD) reported strong financial and operating results for the first quarter 2007 as net income increased 162 percent and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 23 percent over the first quarter 2006.
First Quarter Earnings and Financial Highlights For the three months ended March 31, 2007, Parker posted net income of $30.0 million, or $0.27 per diluted share, on revenues of $151.3 million, compared to revenues of $147.3 million and net income of $11.5 million, or $0.11 per diluted share, for the first quarter 2006. Net income in the first quarter 2007 included net non-routine income of $0.07 per diluted share, or $8.2 million, relating to the gain on the sale of two workover barge rigs in January. In addition, Parker recognized a non-cash charge to tax expense of $1.9 million, or $0.02 per diluted share, 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"). The first quarter 2006 included $0.01 per diluted share benefit of non-routine items relating to a change in value of derivative instruments. (The details of the non-routine items for the quarter are available on Parker's website and can be viewed or downloaded by going to "Investor Relations" and then to "Reconciliation of Non-Routine Items.")
EBITDA was $61.7 million for the first quarter 2007, 23 percent higher than the $50.3 million in the first quarter 2006. Significantly higher dayrates resulted in a 59 percent EBITDA improvement for Parker's U.S. operations over the first quarter 2006. Quail Tools also showed improvement, with a 12 percent increase from the first quarter 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.)
Capital expenditures for the three months ended March 31, 2007 totaled $53.0 million. Total debt was $329.2 million, and the Company's cash, cash equivalents and marketable securities totaled $157.6 million at March 31, 2007.
Average utilization for the Gulf of Mexico barge rigs for the first quarter 2007 was 73 percent, the same as reported for the first quarter 2006 and higher than the 68 percent reported for the fourth quarter 2006. Current barge rig utilization is 65 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico continued to experience record levels, averaging $51,600 per day during the first quarter 2007, up approximately 37 percent, or $13,900 per day, from the first quarter 2006 and up $2,100 per day from the fourth quarter 2006.
The average utilization of international land rigs for the first quarter 2007 was 66 percent, up 20 percent from the 46 percent reported for the fourth quarter 2006, but lower than the 84 percent in the first quarter 2006. Current international utilization, including contracts for three rigs announced today, is 75 percent and is expected to further increase during 2007 as rigs continue to reposition between contracts.
Quail Tools, Parker Drilling's drilling and production rental tools subsidiary, continued its outstanding performance as it recorded EBITDA of $18.8 million in the first quarter 2007, up $2.0 million from the first quarter 2006. The expansion of Quail is well underway as equipment is being delivered to Quail's new facility in Texarkana, Texas, which opened on April 2. The new facility provides increased coverage of the Barnett, Fayetteville and Woodford shale areas in East Texas, Arkansas and Oklahoma.
Robert L. Parker Jr., Chairman, President and Chief Executive Officer of Parker Drilling, said: "We continue to focus on the execution of our strategic growth plan, as we delivered two new international land rigs to Algeria and today announced three-year contracts for two new rigs in Mexico and a two-year contract for Rig 230 in Turkmenistan. Once these rigs are delivered to Mexico, we will have five land rigs and one barge rig operating in Mexico, all under long-term contracts."
"Looking ahead, we expect increasing contributions from our international segments as we continue to focus on our international markets," said Parker. "Domestically, we experienced steady demand for our preferred barge rigs in our U.S. Gulf of Mexico transition zone market. We view recent softening in the U.S. Gulf of Mexico as a reflection of the uncertainty in the U.S. gas market. Although this uncertainty has reduced rates from historic highs, we believe that there is sufficient demand to generate strong financial results from our domestic barge fleet through 2007. Finally, we also expect continued outstanding performance from our rental tools segment, as the benefits of our organic expansion and capital investment in Quail Tools are realized. Importantly, we experienced no lost-time accidents during the quarter. Safety is essential to recruiting and retaining the best people. Parker's preferred drilling solutions deliver a lower total cost of drilling through efficient, safe operations and drilling quality wells. We expect our competitive advantage to drive continued improvements in utilization and profits into 2007."