EX-99.1 2 q4-12312016xexhibit991.htm EXHIBIT 99.1 Exhibit
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.