Parker Drilling Reports 2016 Fourth Quarter Results

HOUSTON, Feb. 15, 2017 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the fourth quarter ended December 31, 2016, including a reported net loss of $48.9 million, or a $0.39 loss per share, on revenues of $94.0 million.

The net loss includes a pre-tax $0.9 million expense related to executive departures and a $6.8 million non-cash valuation allowance taken primarily against UK deferred tax assets largely relating to fixed assets.  The valuation allowance accounted for $0.05 of the reported loss per share. While the deferred tax assets have been reserved on the Company's financial statements, they have not expired and remain available to offset future cash taxes.  Excluding these items, the adjusted net loss was $41.3 million, or a $0.33 loss per share.

Fourth quarter Adjusted EBITDA was $5.2 million.

"Our fourth quarter results were in line with our expectations in the face of ongoing market challenges.  We continue our efforts to maximize results and aggressively pursue opportunities across all of our business lines," said Gary Rich, the Company's Chairman, President and CEO.

"U.S. land activity drove improvements in our U.S. Rental Tools Tubular Goods Utilization Index.  We also saw continued multi-well rig inquiries in the U.S. barge business.  We executed a contract for an 11 well, or approximately six month, project for 1 barge rig that has mobilized to its first well location and have prospects for 2 to 3 additional contracts with anticipated start-ups late in the first quarter.  Internationally, current activity levels remain low; however, we see increased rig tendering in many of our markets for work anticipated to begin in late 2017 or early 2018.

"Throughout 2016, we remained focused on disciplined cost control and cash management while maintaining the strength of our business lines in order to benefit from improving conditions. We ended the quarter with $210 million in liquidity, up from $194 million at the end of the third quarter, including $120 million in cash and $90 million available on our undrawn revolver.

"For 2017, we have identified a number of growth opportunities and estimate total capital expenditures of $40 to $50 million, with expenditures weighted toward the first half of 2017.  While we are increasing investments in our growth, we will continue to carefully manage our liquidity and costs so we can respond to changing market conditions and opportunities that develop," concluded Rich.

Fourth Quarter Review

Parker Drilling's revenues for the 2016 fourth quarter, compared with the 2016 third quarter, decreased 3.3 percent to $94.0 million from $97.2 million.  Operating gross margin, excluding depreciation and amortization expense (gross margin) increased 8.0 percent to $13.5 million from $12.5 million and gross margin as a percentage of revenues was 14.4 percent, compared with 12.9 percent for the prior period. 

Drilling Services

For the Company's Drilling Services business, which is comprised of the U.S. (Lower 48) Drilling and the International & Alaska Drilling segments, revenues declined 6.6 percent to $62.3 million from $66.7 million.  Gross margin increased 9.1 percent to $10.8 million from $9.9 million, and gross margin as a percentage of revenues was 17.3 percent, compared with 14.8 percent for the prior period.  Contracted backlog was $379 million at the end of the fourth quarter compared with $421 million as of September 30, 2016.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues were $0.8 million, a 42.9 percent decrease from 2016 third quarter revenues of $1.4 million.  Gross margin was a $3.4 million loss as compared with a 2016 third quarter loss of $3.7 million. The decline in revenues was primarily the result of fewer revenue days, and the improvement in gross margin was due to lower costs.

International & Alaska Drilling

International & Alaska Drilling segment revenues were $61.5 million, a 5.8 percent decrease from 2016 third quarter revenues of $65.3 million.  Gross margin was $14.2 million, a 4.4 percent increase from 2016 third quarter gross margin of $13.6 million. Gross margin as a percentage of revenues was 23.1 percent as compared with 20.8 percent for the 2016 third quarter. The decrease in revenues was primarily attributable to lower reimbursable activity partially offset by an increase in activity associated with our Atlantic Canada O&M project.  The increase in gross margin was primarily the result of lower operating expenses in addition to a benefit associated with the release of a legacy contract related accrual.

Rental Tools Services

Rental Tools Services revenues were $31.7 million, a 3.9 percent increase from 2016 third quarter revenues of $30.5 million.  Gross margin was $2.7 million, a 3.8 percent increase from $2.6 million for the 2016 third quarter. Gross margin as a percentage of revenues was 8.5 percent as compared with 8.5 percent in the 2016 third quarter.

U.S. Rental Tools

U.S. Rental tools segment revenues were $16.1 million, compared with $15.0 million for the 2016 third quarter. Gross margin was $4.0 million compared with $4.2 million for the 2016 third quarter.  Revenues were up as land based activity outpaced declines in offshore activity.  Gross margin declined as a result of bad debt expense.

International Rental Tools

International Rental Tools segment revenues were $15.6 million, compared with $15.5 million for the 2016 third quarter and gross margin was a loss of $1.3 million compared with a loss of $1.7 million for the 2016 third quarter.  The improvement in gross margin was due to lower operating expenses.

Consolidated

General and Administrative expense increased to $9.1 million for the 2016 fourth quarter, from $7.4 million for the 2016 third quarter, predominately due to incentive plan adjustments and a $0.9 million charge related to executive departures recorded in the fourth quarter of 2016.

Capital expenditures in the fourth quarter were $8.0 million, and were $29.0 million for the year.

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, February 16, 2017, to review reported results.  You may access the call by telephone at (412) 902-0003 and asking for the 2016 Fourth Quarter Conference Call.  The call may also be accessed through the Investor Relations section of the Company's website.  A replay of the call can be accessed on the Company's website for 12 months and will be available by telephone through February 23, 2017, at (201) 612-7415, access code 13653021#.

Cautionary Statement

This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements in this press release other than statements of historical facts addressing activities, events or developments the Company expects, projects, believes, or anticipates will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about anticipated future financial or operational results; the outlook for rental tools utilization and rig utilization and dayrates; the results of past capital expenditures; scheduled start-ups of rigs; general industry conditions such as the demand for drilling and the factors affecting demand; competitive advantages such as technological innovation; future operating results of the Company's rigs, rental tools operations and projects under management; future capital expenditures; expansion and growth opportunities; acquisitions or joint ventures; asset purchases and sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs or rental equipment for operation; the Company's financial position; changes in utilization or market share; outcomes of legal proceedings; compliance with credit facility and indenture covenants; and similar matters. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Although the Company believes its expectations stated in this press release are based on reasonable assumptions, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that could cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to changes in worldwide economic and business conditions, fluctuations in oil and natural gas prices, compliance with existing laws and changes in laws or government regulations, the failure to realize the benefits of, and other risks relating to, acquisitions, the risk of cost overruns, our ability to refinance our debt and other important factors, many of which could adversely affect market conditions, demand for our services, and costs, and all or any one of which could cause actual results to differ materially from those projected. For more information, see "Risk Factors" in the Company's Annual Report filed on Form 10-K with the Securities and Exchange Commission and other public filings and press releases. Each forward-looking statement speaks only as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

This news release contains non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided in the following tables.

Company Description

Parker Drilling provides drilling services and rental tools to the energy industry. The Company's Drilling Services business serves operators in the inland waters of the U.S. Gulf of Mexico utilizing Parker Drilling's barge rig fleet and in select U.S. and international markets and harsh-environment regions utilizing Parker-owned and customer-owned equipment. The Company's Rental Tools Services business supplies premium equipment and well services to operators on land and offshore in the U.S. and international markets.  More information about Parker Drilling can be found on the Company's website at www.parkerdrilling.com.

Contact: Jason Geach, Vice President, Investor Relations & Corporate Development (+1) (281) 406-2310, jason.geach@parkerdrilling.com.

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SOURCE Parker Drilling Company