Parker Drilling (PKDC) 8-K Parker Drilling Reports 2016 Fourth Quarter Results

EXHIBIT 99.1

Parker Drilling Reports 2016 Fourth Quarter Results

HOUSTON, February 15, 2017 - 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.

PARKER DRILLING COMPANY
Consolidated Condensed Balance Sheets
(Dollars in Thousands)
	December 31, 2016		December 31, 2015
	(Unaudited)
ASSETS:
Current Assets
Cash and Cash Equivalents	$	119,691	$	134,294
Accounts and Notes Receivable, Net	113,231		175,105
Rig Materials and Supplies	32,354		34,937
Deferred Costs	1,436		1,367
Other Current Assets	19,606		21,038
Total Current Assets	286,318		366,741
Property, Plant and Equipment, net	693,439		805,841
Other Assets
Deferred Income Taxes	70,309		139,282
Other Assets	53,485		54,838
Total Other Assets	123,794		194,120
Total Assets	$	1,103,551	$	1,366,702
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities
Accounts Payable and Accrued Liabilities	$	102,921	$	136,121
Total Current Liabilities	102,921		136,121
Long-Term Debt, net of debt issuance costs	576,326		574,798
Deferred Tax Liability	69,333		68,654
Other Long-Term Liabilities	15,836		18,617
Total Stockholders' Equity	339,135		568,512
Total Liabilities and Stockholders' Equity	$	1,103,551	$	1,366,702

PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
							Three Months Ended September 30,
	Three Months Ended December 31,
	2016			2015			2016
Revenues	$	94,025		$	148,748		$	97,189
Expenses:
Operating Expenses	80,529			114,488			84,680
Depreciation and Amortization	33,190			37,720			34,474
	113,719			152,208			119,154
Total Operating Gross Margin	(19,694		)	(3,460		)	(21,965		)
General and Administrative Expense	(9,132		)	(6,947		)	(7,424		)
Provision for Reduction in Carrying Value of Certain Assets	—			(9,268		)	—
Gain (Loss) on Disposition of Assets, net	(1,364		)	(1,043		)	(187		)
Total Operating Income (Loss)	(30,190		)	(20,718		)	(29,576		)
Other Income (Expense)
Interest Expense	(11,048		)	(11,388		)	(11,015		)
Interest Income	10			60			9
Other	(1,409		)	(6,119		)	(351		)
Total Other Income (Expense)	(12,447		)	(17,447		)	(11,357		)
Income (Loss) before Income Taxes	(42,637		)	(38,165		)	(40,933		)
Income Tax Expense (Benefit)	6,292			(2,519		)	5,295
Net Income (Loss)	(48,929		)	(35,646		)	(46,228		)
Less: Net Income (Loss) Attributable to Noncontrolling Interest	—			—			—
Net Income (Loss) Attributable to Controlling Interest	$	(48,929	)	$	(35,646	)	$	(46,228	)
Income (Loss) per Share - Basic
Net Income (Loss)	$	(0.39	)	$	(0.29	)	$	(0.37	)
Income (Loss) per Share - Diluted
Net Income (Loss)	$	(0.39	)	$	(0.29	)	$	(0.37	)
Number of common shares used in computing earnings per share:
Basic	124,830,473			122,951,598			124,486,848
Diluted	124,830,473			122,951,598			124,486,848

PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
	Year Ended December 31,
	2016			2015			2014
Revenues	$	427,004		$	712,183		$	968,684
Expenses:
Operating Expenses	362,521			526,290			669,381
Depreciation and Amortization	139,795			156,194			145,121
	502,316			682,484			814,502
Total Operating Gross Margin	(75,312		)	29,699			154,182
General and Administrative Expense	(34,332		)	(36,190		)	(35,016		)
Provision for Reduction in Carrying Value of Certain Assets	—			(12,490		)	—
Gain (Loss) on Disposition of Assets, Net	(1,613		)	1,643			1,054
Total Operating Income (Loss)	(111,257		)	(17,338		)	120,220
Other Income (Expense)
Interest Expense	(45,812		)	(45,155		)	(44,265		)
Interest Income	58			269			195
Loss on extinguishment of debt	—			—			(30,152		)
Other	367			(9,747		)	2,539
Total Other Income (Expense)	(45,387		)	(54,633		)	(71,683		)
Income (Loss) before Income Taxes	(156,644		)	(71,971		)	48,537
Income Tax Expense (Benefit)	74,170			22,313			24,076
Net Income (Loss)	(230,814		)	(94,284		)	24,461
Less: Net Income (Loss) Attributable to Noncontrolling Interest	—			789			1,010
Net Income (Loss) Attributable to Controlling Interest	$	(230,814	)	$	(95,073	)	$	23,451
Income (Loss) per Share - Basic
Net Income (Loss)	$	(1.86	)	$	(0.78	)	$	0.19
Income (Loss) per Share - Diluted
Net Income (Loss)	$	(1.86	)	$	(0.78	)	$	0.19
Number of common shares used in computing earnings per share:
Basic	124,130,004			122,562,187			121,186,464
Diluted	124,130,004			122,562,187			123,076,648

PARKER DRILLING COMPANY
Selected Financial Data
(Dollars in Thousands)
(Unaudited)
		Three Months Ended									Year Ended December 31,
		December 31,						September 30,			2016			2015			2014
		2016			2015			2016
Revenues:
Drilling Services:
U.S. (Lower 48) Drilling		$	848		$	3,451		$	1,431		$	5,429		$	30,358		$	158,405
International & Alaska Drilling		61,478			95,546			65,307			287,332			435,096			462,513
	Total Drilling Services:	62,326			98,997			66,738			292,761			465,454			620,918
Rental Tools Services:
U.S. Rental Tools		16,130			28,734			14,967			71,613			141,889			223,545
International Rental Tools		15,569			21,017			15,484			62,630			104,840			124,221
	Total Rental Tools Services	31,699			49,751			30,451			134,243			246,729			347,766
	Total Revenues	$	94,025		$	148,748		$	97,189		$	427,004		$	712,183		$	968,684
Operating Expenses:
Drilling Services:
U.S. (Lower 48) Drilling		$	4,232		$	5,616		$	5,112		$	19,733		$	36,247		$	90,314
International & Alaska Drilling		47,307			72,902			51,682			222,824			325,346			368,424
	Total Drilling Services:	51,539			78,518			56,794			242,557			361,593			458,738
Rental Tools Services:
U.S. Rental Tools		12,102			15,593			10,746			50,216			77,056			105,353
International Rental Tools		16,888			20,377			17,140			69,748			87,641			105,290
	Total Rental Tools Services	28,990			35,970			27,886			119,964			164,697			210,643
	Total Operating Expenses	$	80,529		$	114,488		$	84,680		$	362,521		$	526,290		$	669,381
Operating Gross Margin:
Drilling Services:
U.S. (Lower 48) Drilling		$	(3,384	)	$	(2,165	)	$	(3,681	)	$	(14,304	)	$	(5,889	)	$	68,091
International & Alaska Drilling		14,171			22,644			13,625			64,508			109,750			94,089
	Total Drilling Services	10,787			20,479			9,944			50,204			103,861			162,180
Rental Tools Services:
U.S. Rental Tools		4,028			13,141			4,221			21,397			64,833			118,192
International Rental Tools		(1,319		)	640			(1,656		)	(7,118		)	17,199			18,931
	Total Rental Tools Services	2,709			13,781			2,565			14,279			82,032			137,123
	Total Operating Gross Margin Excluding   Depreciation and Amortization	13,496			34,260			12,509			64,483			185,893			299,303
Depreciation and Amortization		(33,190		)	(37,720		)	(34,474		)	(139,795		)	(156,194		)	(145,121		)
	Total Operating Gross Margin	$	(19,694	)	$	(3,460	)	$	(21,965	)	$	(75,312	)	$	29,699		$	154,182

PARKER DRILLING COMPANY
Adjusted EBITDA (1)
(Dollars in Thousands)
(Unaudited)
	Three Months Ended
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Net Income (Loss) Attributable to Controlling Interest	$	(48,929	)	$	(46,228	)	$	(39,822	)	$	(95,835	)	$	(35,646	)
Interest Expense	11,048			11,015			12,187			11,562			11,388
Income Tax Expense (Benefit)	6,292			5,295			(913		)	63,496			(2,519		)
Depreciation and Amortization	33,190			34,474			36,317			35,814			37,720
EBITDA	1,601			4,556			7,769			15,037			10,943
Adjustments:
Other (Income) Expense	1,399			342			326			(2,492		)	6,059
(Gain) Loss on Disposition of Assets, net	1,364			187			2			60			1,043
Provision for Reduction in Carrying Value of Certain Assets	—			—			—			—			9,268
Special items (2)	876			—			—			—			1,265
Adjusted EBITDA	$	5,240		$	5,085		$	8,097		$	12,605		$	28,578
(1) We believe Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), remeasurement of foreign currency transactions, tax consequences, impairment and other special items. Special items include items impacting operating expenses that management believes detract from an understanding of normal operating performance. Management uses Adjusted EBITDA as a supplemental measure to review current period operating performance and period to period comparisons. Our Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner. EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. Generally Accepted Accounting Principles (GAAP), and should not be considered in isolation or as an alternative to operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.
(2) Special items include: - For the three months ended December 31, 2015, special items include a $1.3 million write-off of inventory associated with our decision to no longer provide drilling services in Colombia. - For the three months ended December 31, 2016, special items include $0.9 million of net severance associated with the departure of three executives.

PARKER DRILLING COMPANY
Reconciliation of Adjusted Earnings Per Share
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
		Three Months Ended
		December 31,						September 30,
		2016			2015			2016
Net Income (Loss) Attributable to Controlling Interest		$	(48,929	)	$	(35,646	)	$	(46,228	)
Income (Loss) per Diluted Share		$	(0.39	)	$	(0.29	)	$	(0.37	)
Adjustments:
	Sale of investment in joint venture	$	—		4,799			—
	Provision for reduction in carrying value of certain assets	—			9,268			—
	Write-off inventory	—			1,265			—
	Valuation allowance	6,772			—			—
	Special Items	876			—			—
	Total adjustments	7,648			15,332			—
	Tax effect of adjustments	—			(3,010		)	—
	Net adjustments	7,648			12,322			—
Adjusted net income (loss) attributable to controlling interest(1)		$	(41,281	)	$	(23,324	)	$	(46,228	)
Adjusted income (loss) per diluted share(1)		$	(0.33	)	$	(0.19	)	$	(0.37	)
(1) We believe Adjusted Net Income (Loss) Attributable to Controlling Interest and Adjusted Income (Loss) per Diluted Share are useful financial measures for investors to assess and understand operating performance for period to period comparisons. Management views the adjustments to Net Income (Loss) Attributable to Controlling Interest and Income (Loss) per Diluted Share to be items outside of the Company’s normal operating results. Adjusted Net Income (Loss) Attributable to Controlling Interest and Adjusted Income (Loss) per Diluted Share are not measures of financial performance under GAAP, and should not be considered in isolation or as an alternative to Net Income (Loss) or Income (Loss) per Diluted Share.