| | | | |
| | Investor Contact: | | David Tucker |
| | | | 281-406-2370 |
| | Media Contact: | | Marianne Gooch |
| | | | 281-406-2212 |
Parker Drilling Announces 41% Increase in Annual Revenues
* Eliminates Valuation Allowance
Houston, Feb. 15, 2006 — Parker Drilling Company (NYSE: PKD) today reported 2005 fourth quarter revenues of $149.6 million and net income of $56.7 million or $0.58 per diluted share, compared to 2004 fourth quarter revenues of $109.8 million and a net loss of $5.3 million or $0.06 per share. Net income for the fourth quarter of 2005 includes $44.6 million or $0.45 per diluted share from non-routine items, $44.9 million of which is a non-cash deferred tax benefit, related primarily to the elimination of the valuation allowance. (See detail below).
For the year 2005, Parker Drilling reported revenues of $531.7 million and net income of $98.9 million, or $1.01 per diluted share. These revenues reflect a 41% increase while net income increased $146.0 million over 2004. For the year 2004, Parker Drilling reported revenues of $376.5 million and a net loss of $47.1 million, or $0.50 per share. Net income for 2005 includes non-routine items of $0.56 per diluted share. The details of the non-routine items for the year and 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-GAAP Measures.”
“We experienced one of our best years ever in 2005. Our operations not only contributed strong financial results, but also a record year for safety. We exceeded our debt reduction goal during the fourth quarter and with proceeds from our recent equity offering, we have taken steps to continue growing the company in 2006,” said Robert L. Parker Jr., president and chief executive officer.
The average utilization of international land rigs for the fourth quarter of 2005 was 84 percent, significantly higher than the 65 percent reported for the fourth quarter of 2004. Current utilization is 83 percent for international land rigs. Average utilization for the Gulf of Mexico barge rigs for the fourth quarter of 2005 was 73 percent, compared to 79 percent reported for the fourth quarter of 2004. Current utilization is 74 percent for Gulf of Mexico barge rigs. Our deep drilling barge dayrates in the Gulf of Mexico averaged
approximately $11,600 per day higher in the fourth quarter of 2005 when compared to the fourth quarter of 2004.
Capital expenditures for the year 2005 totaled $69.5 million. Total debt was $380.0 million at December 31, 2005, a reduction of $101.0 million from the previous year. The Company’s cash, cash equivalents and marketable securities totaled $78.2 million at year end compared to $44.3 million at year end 2004.
The Company is positioned to show improved results from operations for 2006 and expects net income to range from $0.30 to $0.40 per diluted share. This range includes an estimated deferred tax expense of approximately $0.25 per diluted share.
Elimination of Valuation Allowance
The 2005 results reflect a non-cash benefit from the elimination of the valuation allowance related to net operating loss carryforwards and other deferred tax assets in the United States. The valuation allowance was originally recorded in accordance with Generally Accepted Accounting Principles (GAAP) as an offset to the Company’s deferred tax assets, which consisted primarily of net operating loss carryforwards. GAAP required the Company to recognize a valuation allowance unless it was “more likely than not” that the Company could realize the benefit of the net operating loss carryforwards and deferred tax assets in future periods. Because the expected earnings performance should enable the Company to benefit from the net operating loss carryforwards, the valuation allowance is no longer required. In 2006 the Company will begin to report deferred income tax expense. While this will reduce reportable net income, the Company will receive the benefit from not having to pay any significant U.S. cash taxes until the net operating loss has been fully utilized.
Parker has scheduled a conference call at 9 a.m. CST (10 a.m. EST) Feb. 15, 2006 to discuss fourth quarter 2005 results. Those interested in participating in the call may dial in at (303) 205-0066. The conference call replay can be accessed from Feb. 15 through Feb. 22 by dialing (303) 590-3000, using the access code 11052446#. Alternatively, the call can be accessed live through the Company’s website athttp://www.parkerdrilling.com and will be archived on the site for 12 months.
This release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Acts. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including the outlook for rig utilization and dayrates, general industry conditions including bidding activity, future operating results of the Company’s rigs and rental tools operations, capital expenditures, expansion and growth opportunities, asset sales and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this release are based on reasonable assumptions, actual results may differ materially from those expressed or implied in the forward-looking statements. For a more detailed discussion of risk factors, please refer to the Company’s reports filed with the SEC, and in particular, the report onForm 10-K for the year ended December 31, 2004. Each forward-looking statement speaks only as of the date of this release, and the Company undertakes no obligation to publicly update or revise any forward-looking statement.
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | | Twelve Months Ended December 31, | |
| | 2005 | | | 2004 | | | 2005 | | | 2004 | |
| | (Dollars in Thousands) | |
DRILLING AND RENTAL REVENUES | | | | | | | | | | | | | | | | |
U.S. Drilling | | $ | 36,162 | | | $ | 25,303 | | | $ | 128,252 | | | $ | 88,512 | |
International Drilling | | | 87,985 | | | | 64,608 | | | | 308,572 | | | | 220,846 | |
Rental Tools | | | 25,413 | | | | 19,889 | | | | 94,838 | | | | 67,167 | |
| | | | | | | | | | | | |
TOTAL DRILLING AND RENTAL REVENUES | | | 149,560 | | | | 109,800 | | | | 531,662 | | | | 376,525 | |
| | | | | | | | | | | | |
DRILLING AND RENTAL OPERATING EXPENSES | | | | | | | | | | | | | | | | |
U.S. Drilling | | | 18,423 | | | | 15,530 | | | | 66,827 | | | | 54,126 | |
International Drilling | | | 68,514 | | | | 46,233 | | | | 237,161 | | | | 168,451 | |
Rental Tools | | | 10,723 | | | | 8,154 | | | | 38,211 | | | | 28,037 | |
Depreciation and Amortization | | | 16,619 | | | | 18,642 | | | | 67,204 | | | | 69,241 | |
| | | | | | | | | | | | |
TOTAL DRILLING AND RENTAL OPERATING EXPENSES | | | 114,279 | | | | 88,559 | | | | 409,403 | | | | 319,855 | |
| | | | | | | | | | | | |
DRILLING AND RENTAL OPERATING INCOME | | | 35,281 | | | | 21,241 | | | | 122,259 | | | | 56,670 | |
| | | | | | | | | | | | |
General and Administrative Expense | | | (8,011 | ) | | | (5,455 | ) | | | (27,830 | ) | | | (23,413 | ) |
Gain on Disposition of Assets, Net | | | 3,185 | | | | 2,328 | | | | 25,578 | | | | 3,730 | |
Provision for Reduction in Carrying Value of Certain Assets | | | (2,584 | ) | | | (6,562 | ) | | | (4,884 | ) | | | (13,120 | ) |
| | | | | | | | | | | | |
TOTAL OPERATING INCOME | | | 27,871 | | | | 11,552 | | | | 115,123 | | | | 23,867 | |
| | | | | | | | | | | | |
OTHER INCOME AND (EXPENSE) | | | | | | | | | | | | | | | | |
Interest Expense | | | (10,473 | ) | | | (11,291 | ) | | | (42,113 | ) | | | (50,368 | ) |
Change in Fair Value of Derivative Positions | | | 550 | | | | 586 | | | | 2,076 | | | | (794 | ) |
Loss on Extinguishment of Debt | | | (1,613 | ) | | | (24 | ) | | | (8,241 | ) | | | (8,753 | ) |
Other Income (Expense) — Net | | | 1,285 | | | | 31 | | | | 3,383 | | | | 492 | |
| | | | | | | | | | | | |
TOTAL OTHER INCOME AND (EXPENSE) | | | (10,251 | ) | | | (10,698 | ) | | | (44,895 | ) | | | (59,423 | ) |
| | | | | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | | 17,620 | | | | 854 | | | | 70,228 | | | | (35,556 | ) |
| | | | | | | | | | | | |
INCOME TAX EXPENSE (BENEFIT) | | | | | | | | | | | | | | | | |
Current Tax Expense | | | 5,825 | | | | 3,001 | | | | 16,328 | | | | 15,009 | |
Deferred Tax Benefit | | | (44,912 | ) | | | — | | | | (44,912 | ) | | | — | |
| | | | | | | | | | | | |
TOTAL INCOME TAX EXPENSE (BENEFIT) | | | (39,087 | ) | | | 3,001 | | | | (28,584 | ) | | | 15,009 | |
| | | | | | | | | | | | |
INCOME (LOSS) FROM CONTINUING OPERATIONS | | | 56,707 | | | | (2,147 | ) | | | 98,812 | | | | (50,565 | ) |
Discontinued Operations, Net of Taxes | | | — | | | | (3,104 | ) | | | 71 | | | | 3,482 | |
| | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | 56,707 | | | $ | (5,251 | ) | | $ | 98,883 | | | $ | (47,083 | ) |
| | | | | | | | | | | | |
|
EARNINGS (LOSS) PER SHARE — BASIC | | | | | | | | | | | | | | | | |
Income (Loss) From Continuing Operations | | $ | 0.59 | | | $ | (0.03 | ) | | $ | 1.03 | | | $ | (0.54 | ) |
Discontinued Operations, Net of Taxes | | $ | — | | | $ | (0.03 | ) | | $ | — | | | $ | 0.04 | |
Net Income (Loss) | | $ | 0.59 | | | $ | (0.06 | ) | | $ | 1.03 | | | $ | (0.50 | ) |
|
EARNINGS (LOSS) PER SHARE — DILUTED | | | | | | | | | | | | | | | | |
Income (Loss) From Continuing Operations | | $ | 0.58 | | | $ | (0.03 | ) | | $ | 1.01 | | | $ | (0.54 | ) |
Discontinued Operations, Net of Taxes | | $ | — | | | $ | (0.03 | ) | | $ | — | | | $ | 0.04 | |
Net Income (Loss) | | $ | 0.58 | | | $ | (0.06 | ) | | $ | 1.01 | | | $ | (0.50 | ) |
|
AVERAGE COMMON SHARES OUTSTANDING | | | | | | | | | | | | | | | | |
Basic | | | 96,562,584 | | | | 94,615,448 | | | | 95,818,893 | | | | 94,113,257 | |
Diluted | | | 98,617,411 | | | | 94,615,448 | | | | 97,615,741 | | | | 94,113,257 | |
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
| | | | | | | | |
| | December 31, 2005 | | | December 31, 2004 | |
ASSETS | | (Dollars in Thousands) | |
CURRENT ASSETS | | | | | | | | |
Cash and Cash Equivalents | | $ | 60,176 | | | $ | 44,267 | |
Marketable Securities | | | 18,000 | | | | — | |
Accounts and Notes Receivable, Net | | | 104,681 | | | | 99,315 | |
Rig Materials and Supplies | | | 18,179 | | | | 19,206 | |
Deferred Costs | | | 4,223 | | | | 13,546 | |
Other Current Assets | | | 76,076 | | | | 9,818 | |
| | | | | | |
TOTAL CURRENT ASSETS | | | 281,335 | | | | 186,152 | |
| | | | | | |
|
PROPERTY, PLANT AND EQUIPMENT, NET | | | 355,397 | | | | 382,824 | |
|
ASSETS HELD FOR SALE | | | — | | | | 23,665 | |
|
OTHER ASSETS | | | | | | | | |
Goodwill | | | 107,606 | | | | 107,606 | |
Other Assets | | | 59,252 | | | | 26,343 | |
| | | | | | |
TOTAL OTHER ASSETS | | | 166,858 | | | | 133,949 | |
| | | | | | |
|
TOTAL ASSETS | | $ | 803,590 | | | $ | 726,590 | |
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
CURRENT LIABILITIES | | | | | | | | |
Current Portion of Long-Term Debt | | $ | — | | | $ | 24 | |
Accounts Payable and Accrued Liabilities | | | 151,100 | | | | 87,329 | |
| | | | | | |
TOTAL CURRENT LIABILITIES | | | 151,100 | | | | 87,353 | |
| | | | | | |
|
LONG-TERM DEBT | | | 380,015 | | | | 481,039 | |
|
OTHER LIABILITIES | | | 12,646 | | | | 9,281 | |
|
STOCKHOLDERS’ EQUITY | | | 259,829 | | | | 148,917 | |
|
| | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 803,590 | | | $ | 726,590 | |
| | | | | | |
|
Current Ratio | | | 1.86 | | | | 2.13 | |
|
Total Long-Term Debt as a Percent of Capitalization | | | 59 | % | | | 76 | % |
|
Book Value Per Common Share | | $ | 2.66 | | | $ | 1.57 | |
PARKER DRILLING COMPANY AND SUBSIDIARIES
Selected Financial Data
(Unaudited)
| | | | | | | | | | | | |
| | Three Months Ended | |
| | December 31, | | | September 30, | |
| | 2005 | | | 2004 | | | 2005 | |
DRILLING AND RENTAL REVENUES | | (Dollars in Thousands) | |
U.S. Drilling | | $ | 36,162 | | | $ | 25,303 | | | $ | 33,863 | |
International Land Drilling | | | 72,503 | | | | 56,502 | | | | 54,584 | |
International Offshore Drilling | | | 15,482 | | | | 8,106 | | | | 15,530 | |
Rental Tools | | | 25,413 | | | | 19,889 | | | | 23,928 | |
| | | | | | | | | |
Total Drilling and Rental Revenues | | | 149,560 | | | | 109,800 | | | | 127,905 | |
| | | | | | | | | |
|
DRILLING AND RENTAL OPERATING EXPENSES | | | | | | | | | | | | |
U.S. Drilling | | | 18,423 | | | | 15,530 | | | | 15,178 | |
International Land Drilling | | | 55,315 | | | | 40,727 | | | | 39,734 | |
International Offshore Drilling | | | 13,199 | | | | 5,506 | | | | 13,413 | |
Rental Tools | | | 10,723 | | | | 8,154 | | | | 10,352 | |
| | | | | | | | | |
Drilling and Rental Operating Expenses | | | 97,660 | | | | 69,917 | | | | 78,677 | |
| | | | | | | | | |
|
DRILLING AND RENTAL OPERATING INCOME | | | | | | | | | | | | |
U.S. Drilling | | | 17,739 | | | | 9,773 | | | | 18,685 | |
International Land Drilling | | | 17,188 | | | | 15,775 | | | | 14,850 | |
International Offshore Drilling | | | 2,283 | | | | 2,600 | | | | 2,117 | |
Rental Tools | | | 14,690 | | | | 11,735 | | | | 13,576 | |
Depreciation and Amortization | | | (16,619 | ) | | | (18,642 | ) | | | (16,563 | ) |
| | | | | | | | | |
Total Drilling and Rental Operating Income | | | 35,281 | | | | 21,241 | | | | 32,665 | |
|
General and Administrative Expense | | | (8,011 | ) | | | (5,455 | ) | | | (6,443 | ) |
Provision for Reduction in Carrying Value of Certain Assets | | | (2,584 | ) | | | (6,562 | ) | | | (2,300 | ) |
Gain on Disposition of Assets, Net | | | 3,185 | | | | 2,328 | | | | 5,943 | |
| | | | | | | | | |
|
TOTAL OPERATING INCOME | | $ | 27,871 | | | $ | 11,552 | | | $ | 29,865 | |
| | | | | | | | | |
Marketable Rig Count Summary
As of December 31, 2005
| | | | |
| | Total | |
U.S. Gulf of Mexico Barge Rigs | | | | |
Workover | | | 6 | |
Intermediate | | | 4 | |
Deep | | | 9 | |
| | | |
Total U.S. Gulf of Mexico Barge Rigs | | | 19 | |
| | | |
|
International Land Rigs | | | | |
Asia Pacific | | | 9 | |
Mexico | | | 7 | |
CIS | | | 8 | |
| | | |
Total International Land Rigs | | | 24 | |
|
International Barge Rigs | | | | |
Mexico | | | 1 | |
Nigeria | | | 2 | |
Caspian Sea | | | 1 | |
| | | |
Total International Barge Rigs | | | 4 | |
|
| | | |
Total International Rigs | | | 28 | |
| | | |
|
Total Marketable Rigs | | | 47 | |
| | | |