Parker Drilling Reports 'Solid First Quarter'
Parker Drilling Company, a global drilling contractor and service provider, reported financial and operating results for the first quarter 2008, as higher dayrates and utilization in the company's international segment partially offset an expected softening of the U.S. barge rig market.
"Parker Drilling had a solid first quarter, with a substantial increase in total revenues over the comparable prior year quarter due to higher contributions from our international drilling and Quail Tools segments and a better-than-expected performance from our U.S. deep barge rig segment," remarked Robert L. Parker Jr., chairman and chief executive officer. "Utilization in our international and deep barge rig markets is strong, and financial results from our international and Quail Tools segments should continue to improve throughout 2008.
"With this morning's announcement of our return to Alaska with two newbuild rigs incorporating the latest advances in arctic drilling technology, we continue to execute our strategic growth plan of providing a fleet of advanced rigs preferred by our customers in all market conditions."
For the three months ended March 31, 2008, Parker posted net income of $23.9 million, or $0.21 per diluted share, on revenues of $173.3 million, compared to net income of $30.0 million, or $0.27 per diluted share on revenues of $151.3 million for the first quarter 2007. Net income for the first quarter of 2008 included a net benefit of $0.04 per diluted share from non-routine items, comprised of a $1.1 million loss from our Saudi Arabia partnership, a net tax benefit of $6.4 million relating to a settlement of the interest portion of a tax case in Kazakhstan and a valuation allowance on a net operating loss carryforward in Papua New Guinea. Net income in the first quarter 2007 included net non-routine income of $0.05 per diluted share, or $6.0 million, relating primarily to the gain on the sale of two workover barge rigs.
EBITDA was $61.0 million for the first quarter 2008 compared to $61.7 million in the first quarter 2007. Higher dayrates and utilization resulted in a 32 percent EBITDA improvement for Parker's international operations over the first quarter 2007. Quail Tools also showed improvement, with a 26 percent increase from the first quarter 2007. EBITDA for the U.S. barge segment was $24.4 million, compared to $32.4 million in the first quarter of 2007. (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, 2008 totaled $43.2 million. Total debt was $388.6 million, and the Company's cash, cash equivalents and marketable securities totaled $44.7 million at March 31, 2008.
Average utilization for the Gulf of Mexico barge rigs for the first quarter 2008 was 76 percent, compared to the 73 percent reported for the first quarter 2007 and the 83 percent reported for the fourth quarter 2007. Current barge rig utilization is 93 percent. The Company's deep drilling barge dayrates in the Gulf of Mexico averaged $44,800 per day during the first quarter 2008, compared to $51,600 per day in the first quarter 2007 and $43,900 per day in the fourth 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 first quarter 2008 was 72 percent, compared to the 83 percent reported for the fourth quarter 2007, but higher than the 63 percent in the first quarter 2007. Current international utilization is 77 percent.
Quail Tools, Parker's drilling and production rental tools subsidiary with six stores located in the most active resource plays in North America, continued its outstanding performance as it recorded EBITDA of $23.7 million in the first quarter 2008, up $4.8 million from the first quarter 2007.
"Even though overall contributions from the international segment were up significantly from the prior-year quarter, results were impacted by increased costs and demobilization in our Africa/Middle East markets," said Parker. "However, the majority of these costs were absorbed during the first quarter; and as new contracts commence operations we expect strengthening contributions from our international segment for the remainder of 2008.
"Quail Tools has continued to outperform, as first quarter EBITDA significantly exceeded the prior-year period as it reaped substantial benefits from increasing deepwater activity in the Gulf of Mexico as well as increased contributions from its stores serving the Williston Basin and Barnett Shale markets. Going forward, we are confident in the strength of this segment and we expect continued growth throughout the year.
"Despite lower quarter-over-quarter dayrates, our U.S. barge rig segment completed the first quarter of 2008 above expectations. Deep barge rig dayrates actually increased sequentially, and utilization was also higher than our competition in this market, which we attribute to our fleet of preferred rigs and an industry-best workforce. In the near term, we expect our U.S. barge segment to remain active, with a moderate upswing in the second half of the year.
"Our outstanding operational performance in extended-reach, arctic and environmentally sensitive drilling has revolutionized the search for oil and gas, and we are securing new contracts drawing on our expertise as a result, as indicated in this morning's Alaskan Letter of Intent announcement and as forecast in our strategic growth plan. Our outstanding track record at the Sakhalin-1 project and our history of success in Alaska, Russia and Kazakhstan are critical factors that distinguish us from our competition as E&P companies look to exploit increasingly remote and difficult fields. Parker Drilling has long been a leader in developing innovative drilling technology for improving performance and lowering the total cost of drilling for our customers. We anticipate that our unique capabilities will continue to drive growth in 2008 and 2009," Parker concluded.