UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 15, 2013
PARKER DRILLING COMPANY
(Exact name of Registrant as specified in its charter)
| Delaware | 1-7573 | 73-0618660 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 5 Greenway Plaza, Suite 100, Houston, Texas |
77046 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (281) 406-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
On February 15, 2013, Parker Drilling Company (the “Company” or “we”) announced that it had reached a proposed settlement in connection with previously reported investigations by United States Department of Justice (DOJ) and United States Securities and Exchange Commission (SEC), and would recognize a charge of $15.85 million, or $0.13 per diluted share, for the fourth quarter of 2012 associated with the proposed settlement. The Company also provided an update regarding its expectations for results for the fourth quarter of 2012, including that it expects to report a net loss for the fourth quarter of between $0.03 and $0.05 per diluted share, excluding the impact of the settlement with the DOJ and SEC.
Additional information relating to the proposed settlement is set forth under Item 7.01 and is incorporated herein by reference.
A copy of the Company’s press release dated February 15, 2013 is filed as exhibit 99 to this report, and is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure |
As previously disclosed in our SEC filings, we have engaged in settlement discussions with the DOJ and the SEC related to parallel investigations that they conducted regarding possible violations of U.S. law, including the Foreign Corrupt Practices Act (FCPA), by us. In particular, the DOJ and the SEC investigated certain of our operations relating to countries in which we currently operate or formerly operated, including Kazakhstan and Nigeria. We fully cooperated with the DOJ and SEC investigations and conducted an internal investigation into potential customs and other issues in Kazakhstan and Nigeria. Subject to court and regulatory approvals, we have reached agreement in principle regarding a proposed settlement of these matters with the DOJ and the staff of the SEC. However, the proposed agreement in principle with the DOJ and the staff of the SEC relating to investigations of our possible violations of the Foreign Corrupt Practices Act may not become final in its proposed form and could be materially more adverse to us than currently anticipated.
Under the terms of the proposed resolution with the DOJ, it is expected that the Company would enter into a deferred prosecution agreement (DPA), under which the DOJ would defer for three years prosecuting the Company for criminal violations of the anti-bribery provisions of the FCPA relating to the Company’s retention and use of an individual agent in Nigeria with respect to certain customs-related issues, in return for: (i) the Company’s acceptance of responsibility for, and agreement not to contest or contradict the truthfulness of, the statement of facts and allegations to be filed in a United States District Court concurrently with the DPA; (ii) the Company’s payment of an approximately $11.76 million fine; (iii) the Company’s reaffirming its commitment to compliance with the FCPA and other applicable anti-corruption laws in connection with the Company’s operations, and continuing cooperation with domestic and foreign authorities in connection with the matters that are the subject of the DPA; (iv) the Company’s commitment to continue to address any identified areas for improvement in the Company’s internal controls, policies and procedures relating to compliance with the FCPA and other applicable anti-corruption laws if, and to the extent, not already addressed; and (v) the Company’s agreement to report to the DOJ in writing annually during the term of the DPA regarding remediation of the matters that are the subject of the DPA, implementation of any enhanced internal controls, and any evidence of improper payments the Company may have discovered during the term of the agreement. If the Company remains in compliance with the terms of the DPA throughout its effective period, the charge against the Company would be dismissed with prejudice.
Under the terms of the proposed resolution with SEC, the staff of the SEC has agreed to recommend to its governing Commission that the SEC enter into a settlement with the Company, pursuant to which the SEC will file a civil complaint in a United States District Court charging the Company with violations of the anti-bribery, books and records and internal control provisions of the FCPA, and the Company would consent to the entry of a final judgment of permanent injunction barring future violations of the anti-bribery, books and records and internal controls provisions of the FCPA. The Company also would agree to the payment of disgorgement of approximately $3.05 million and prejudgment interest of approximately $1.04 million, for a total of approximately $4.09 million. The proposed agreement with the SEC would not require the payment of a civil monetary fine, and neither the proposed agreement with the DOJ nor the proposed agreement with the SEC would require the appointment of a monitor to oversee the Company’s activities or compliance with applicable laws.
The agreement in principle is contingent upon the parties’ preparation and agreement on the language of the settlement documents, approval of the civil settlement by the SEC’s governing Commission and by a United States District Court. There can be no assurance that this proposed settlement will be finalized, or finalized on the terms currently agreed in principle, and we cannot provide assurances regarding if and when the court and/or the SEC’s governing Commission will approve the settlement.
If one or both of these approvals do not occur, the Company may enter further discussions with the DOJ and/or the SEC to resolve the investigated matters on different terms and conditions; such terms and conditions could include any of a broad range of civil and criminal sanctions under the FCPA and other laws and regulations, which they may seek to impose against corporations and individuals in appropriate circumstances. These include, but are not limited to, injunctive relief, disgorgement, fines, penalties and modifications to business practices and compliance programs. Any such disgorgement, fines, penalties, interest or other associated costs could be materially higher than the amounts that we have currently accrued. The DOJ and the SEC have entered into agreements with, and obtained a range of sanctions against, several public corporations and individuals arising from allegations of improper payments and deficiencies in books and records and internal controls, whereby civil and criminal penalties were imposed. Recent civil and criminal settlements have included multi-million dollar fines, deferred prosecution agreements, guilty pleas, and other sanctions, including the requirement that the relevant corporation retain a monitor to oversee its compliance with the FCPA. In addition, corporations may have to end or modify existing business relationships. The Company could also face fines, sanctions and other penalties imposed by other regulatory authorities or in other legal actions. Any such fines, sanctions or penalties could impact the Company’s business operations and assets, particularly in jurisdictions outside the United States, and could have a material adverse impact on our business, results of operations, financial condition and liquidity.
As previously disclosed, we have taken and continue to take certain steps to enhance our existing anti-bribery compliance efforts, including retaining a full-time Chief Compliance Officer who reports to the Chief Executive Officer and Audit Committee and full-time staff to assist him; adopting revised FCPA policies, procedures, and controls; increasing training and testing requirements; strengthening contractual provisions for our service providers that interface with foreign government officials; improving due diligence and continuing oversight procedures for the review and selection of such service providers; and implementing a compliance awareness improvement initiative that includes issuance of periodic anti-bribery compliance alerts. We will continue to emphasize the importance of compliance and ethical business conduct.
The Company recorded a charge of $15.85 million associated with the proposed settlement with the DOJ and SEC for the fourth quarter of 2012. Such charge, which is included in general and administrative expenses, is subject to change based on the results of any final settlement with DOJ and SEC relating to these matters.
| Item 9.01 | Exhibits |
| 99 | Press release dated February 15, 2013. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PARKER DRILLING COMPANY | ||||||
| Dated: February 15, 2013 | ||||||
| By: | /s/ W. Kirk Brassfield | |||||
| W. Kirk Brassfield | ||||||
| Senior Vice President and Chief Financial Officer | ||||||
Exhibit 99
Parker Drilling Records Charge Regarding Proposed Settlement of DOJ and SEC Investigations
and Issues Outlook for 2012 Fourth Quarter Results
HOUSTON, February 14, 2013 – Parker Drilling Company (NYSE-PKD), an international drilling contractor, drilling services and rental tools provider, today announced that the Company has reached an agreement in principle with the United States Department of Justice (DOJ) and the staff of the United States Securities and Exchange Commission (SEC) related to parallel investigations that the DOJ and SEC conducted regarding possible violations of U.S. law, including the Foreign Corrupt Practices Act (FCPA), by the Company. Parker Drilling has recorded a charge of $15.85 million, or $0.13 per diluted share, for the fourth quarter of 2012, associated with the proposed settlement of these matters. The charge, which is included in general and administrative expense, is subject to change based on the results of any final settlement with the DOJ and SEC relating to these matters.
“We are pleased with this progress, and we will continue to maintain a vigorous FCPA compliance program, to emphasize the importance of compliance and ethical business conduct, and to enhance our compliance efforts,” said Parker Drilling President and Chief Executive Officer, Gary Rich.
The agreement in principle is contingent upon the parties’ preparation and agreement on the language of the settlement documents, approval of the SEC’s civil settlement by its governing Commission and approval by a United States District Court. There can be no assurance that this proposed settlement will be finalized, or finalized on the terms currently agreed in principle, and we cannot provide assurances regarding if and when the court and/or the SEC’s governing Commission will approve the settlement.
2012 Fourth Quarter Outlook
The Company also announced its expectations for its 2012 fourth quarter operating performance and earnings results. Recent trends in the U.S. land and Gulf of Mexico inland waters drilling markets have led to increased competitive conditions for rental tools and slowness in demand for barge drilling rigs. International operations have been impacted by a further reduction in rig utilization. In addition, the fourth quarter’s results include costs and other expenses related to actions taken to improve operating performance and position the Company for long-term success. This includes costs associated with dry-docking some barge drilling rigs, repositioning and redeploying some international drilling rigs and responding to the competitive demands in the rentals tools market. Excluding the impact of the settlement with the DOJ and SEC, the Company expects to report a net loss for the 2012 fourth quarter of between $0.03 and $0.05 per diluted share.
“Each of our operations has responded to market conditions in ways that are already beginning to have a favorable impact on their performance. Nevertheless, market conditions of the fourth quarter have had their effect on our immediate results,” noted Gary Rich.
The Company will discuss the results of the 2012 fourth quarter in more detail following its upcoming earnings release and related conference call.
Earnings Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. CDT (11:00 a.m. EDT) on Thursday, February 21, 2013, to review its reported results. The call can be accessed by telephone, (480) 629-9692, or through the Investor Relations section of the Company’s website, http://www.parkerdrilling.com.
Company Description
Parker Drilling provides high-performance contract drilling solutions, rental tools and project management services to the energy industry. At year-end 2012, Parker’s rig fleet included 22 land rigs and two offshore barge rigs in international locations, 13 barge rigs in the U.S. Gulf of Mexico, and three land rigs in the U.S., one of which was undergoing commissioning in Alaska. The Company’s rental tools business supplies premium equipment to operators on land and offshore in the U.S. and in select international markets. Parker also performs contract drilling for customer-owned rigs and provides technical services addressing drilling challenges for E&P customers worldwide. More information about Parker Drilling can be found at http://www.parkerdrilling.com, including operating status reports for the Company’s Rental Tools segment and its international and U.S. rig fleets, updated monthly.
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 that address activities, events or developments that 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 the proposed settlement of the Company’s DOJ and SEC investigations, anticipated future financial or operational results; the outlook for rig utilization and dayrates; 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; capital expenditures; expansion and growth opportunities; acquisitions or joint ventures; asset sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs for operation; the strengthening of the Company’s financial position; increases in market share; outcomes of legal proceedings and investigations; 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 that 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 that could adversely affect market conditions, fluctuations in oil and natural gas prices that could reduce the demand for drilling services, changes in laws or government regulations that could adversely affect the cost of doing business, our ability to refinance our debt and other important factors that could cause actual results to differ materially from those projected as described in the Company’s reports filed with the Securities and Exchange Commission. See “Risk Factors” in the Company’s Annual Report filed on Form 10-K 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.
Further Information
Investor Relations:
Richard Bajenski. Director, Investor Relations. 281-406-2030
Media Relations:
Stephanie Dixon. Manager, Corporate Communications. 281-406-2212