*DJ Parker Drilling 3Q Loss $2.12M >PKDC
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*DJ Parker Drilling 3Q Loss/Shr 14c >PKDC
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*DJ Parker Drilling 3Q Rev $156.3M >PKDC
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Press Release: Parker Drilling Reports 2019 Fourth Quarter Results
Parker Drilling Reports 2019 Fourth Quarter Results
PR Newswire
HOUSTON, March 3, 2020
HOUSTON, March 3, 2020 /PRNewswire/ -- Parker Drilling Company today announced results for the fourth quarter ended December 31, 2019, which included a net loss of $2.1 million, or a $0.14 loss per share on revenues of $156.3 million. Fourth quarter Adjusted EBITDA was $25.9 million (1) .
Michael W. Sumruld, the Company's Senior Vice President and CFO, said, "We are very pleased with our results in 2019 despite the ongoing challenges in the U.S. markets. Our substantial improvement across all business segments was due to the intense focus our employees have on providing innovative, reliable, and efficient solutions to our customers so they can minimize their operational risks and overall well costs. In particular, our O&M backlog grew over 250% to $627 million at the end of 2019 from $176 million at the end of 2018. We believe our focus on capital efficiency positions us to generate long-term positive cash flow going forward.
"Our fourth-quarter results were in-line with our expectations, reflecting weaker industry conditions in the U.S. and improving conditions in several of our key international markets. In the U.S., our rental tools results were generally in line with the decline in the U.S. rig count and our (lower 48) drilling results were impacted by seasonally lower utilization in the inland waterways of the Gulf of Mexico. In the International rental tools and International and Alaska drilling segments, we posted sequential revenue improvement in the fourth quarter as rental tools experienced higher utilization of our surface and tubulars product line in Guyana, the U.A.E., and India, while drilling benefited from the new Alaska O&M contract, higher utilization in Mexico, and our recently awarded barge rig contract in Kazakhstan," concluded Sumruld.
Fourth Quarter Review
Parker Drilling's revenues for the 2019 fourth quarter, compared with the 2019 third quarter, decreased 2.4 percent to $156.3 million from $160.1 million. Operating gross margin, excluding depreciation and amortization expense ("gross margin"), decreased 24.3 percent to $32.2 million from $42.6 million and gross margin as a percentage of revenues was 20.6 percent, compared with 26.6 percent for the 2019 third quarter.
Rental Tools Services
For the Company's rental tools services business, which is comprised of the U.S. rental tools and International rental tools segments, fourth quarter revenues decreased 7.8 percent to $67.6 million from $73.3 million for the third quarter. Gross margin decreased 22.3 percent to $21.4 million from $27.6 million, and gross margin as a percentage of revenues was 31.7 percent, as compared with 37.6 percent for the 2019 third quarter.
U.S. Rental Tools
U.S. rental tools segment revenues decreased 13.7 percent to $42.5 million in the 2019 fourth quarter from $49.3 million for the 2019 third quarter. Gross margin decreased 26.1 percent to $17.6 million in the 2019 fourth quarter, compared with gross margin of $23.7 million in the 2019 third quarter. The decrease in revenue and gross margin resulted primarily from reduced activity that mirrored the decline in U.S. land rig count and the completion of several deep-water projects midway through the fourth quarter, partially offset by higher revenue from operations in the Permian Basin and Eagle Ford Shale Play.
International Rental Tools
International rental tools segment revenues increased 4.2 percent to $25.1 million in the 2019 fourth quarter from $24.1 million for the 2019 third quarter. Gross margin of $3.9 million in the 2019 fourth quarter was flat with the 2019 third quarter. The increase in revenues was primarily the result of additional activity in certain of our international markets, including Guyana, UAE and India.
(1) Adjusted EBITDA is a non-GAAP financial measure. See the reconciliation
and table of net income/(loss) to EBITDA and Adjusted EBITDA later in
this release for more information on non-GAAP financial measures.
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, fourth quarter revenues increased 2.2 percent to $88.7 million from $86.8 million for the third quarter. Gross margin decreased 28.1 percent to $10.8 million from $15.0 million, and gross margin as a percentage of revenues was 12.2 percent, compared with 17.3 percent for the 2019 third quarter.
U.S. (Lower 48) Drilling
U.S. (lower 48) drilling segment revenues decreased 32.7 percent to $9.7 million in the 2019 fourth quarter from $14.5 million for the 2019 third quarter. Gross margin was $0.1 million in the 2019 fourth quarter, compared with $3.9 million in the third quarter. Revenues and gross margin were lower as a result of seasonal declines in an already depressed inland waterway market, where the Company's barge utilization rates declined to 14% in the fourth quarter from 21% in the third quarter. Also, revenue from the O&M project in California was lower as the project transitioned from the re-activation phase to ongoing plug & abandonment operations.
International & Alaska Drilling
International & Alaska drilling segment revenues increased 9.3 percent to $79.0 million in the 2019 fourth quarter from $72.3 million for the 2019 third quarter. Gross margin decreased 3.6 percent to $10.7 million in the 2019 fourth quarter, compared with $11.1 million in the 2019 third quarter. The increase in revenue was primarily due to higher reimbursable revenues from our Sakhalin O&M work, a full quarter of work for the Alaska O&M contract, higher utilization in Mexico, and our barge rig in Kazakhstan returning to service on a standby rate. This was partially offset by our owned rig in Sakhalin going on a standby rate midway through the fourth quarter as well as lower activity in the Kurdistan region of Iraq after two rigs completed work at the end of July. For the fourth quarter, rig utilization was 50% compared to 45% in the third quarter. This mix of activity resulted in a slight gross margin contraction.
Consolidated
General and administrative expense was $6.4 million for the 2019 fourth quarter. Total liquidity at the end of the quarter was $135.9 million, consisting of $105.0 million in cash and cash equivalents and $30.9 million available under the Company's credit facility.
Capital expenditures in the fourth quarter were $24.4 million and totaled $80.3 million for the full year when combining activity in both predecessor and successor periods, with the majority of capital expenditures directed to the Company's rental tools services business.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Wednesday, March 4, 2020, to review reported results. The call will be available by telephone by dialing (+1) (412) 902-0003 and asking for the Parker Drilling Fourth Quarter Conference Call. The call can 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 March 11, 2020, at (+1) (201) 612-7415, conference ID 13699249#.
Cautionary Statement
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). All statements contained in this news release, other than statements of historical facts, are forward-looking statements for purposes of these provisions. In some cases, you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "outlook," "may," "should," "plan," "seek," "forecast," "target," "will," and "would" or similar words. Forward-looking statements are based on certain assumptions and analyses we make in light of our experience and perception of historical trends, current conditions, expected future developments, and other factors we believe are relevant. Although we believe our assumptions are reasonable based on information currently available, those assumptions are subject to significant risks and uncertainties, many of which are outside our control. Each forward-looking statement speaks only as of the date of this news release, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should be aware that certain events could have a material adverse effect on our business, results of operations, financial condition, and cash flows. For more information about such events, see "Risk Factors" described in Item 1A. of the Company's Annual Report filed on Form 10-K, along with additional risk factors described from time to time in our SEC filings.
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 through the use of Parker-owned and customer-owned rig fleets in select U.S. and international markets, specializing in remote and harsh environment regions. 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.
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Press Release: Parker Drilling Reports 2019 -2-
Contact: Investor Relations, (+1) (281) 406-2000, IR@parkerdrilling.com.
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
Successor Predecessor
------------------- ---------------------
December 31, 2019 December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 104,951 $ 48,602
Restricted cash -- 10,389
Accounts receivable, net 166,456 136,437
Rig materials and supplies 23,267 36,245
Deferred costs 5,223 4,353
Other tax assets 2,949 2,949
Other current assets 17,688 27,929
Total current assets 320,534 266,904
------------------- -------------------
Property, plant and
equipment, net 299,768 534,371
Intangible assets, net 13,675 4,821
Rig materials and supplies 4,766 12,971
Deferred income taxes 4,416 2,143
Other non-current assets 39,689 7,204
Total assets $ 682,848 $ 828,414
=== ============== ==== =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Debtor in possession
financing $ -- $ 10,000
Accounts payable 55,104 39,678
Accrued liabilities 57,954 35,385
Accrued income taxes 5,058 3,385
Total current liabilities 118,116 88,448
------------------- -------------------
Long-term debt 177,937 --
Other long-term liabilities 25,892 11,544
Long-term deferred tax
liability 7,002 510
Commitments and
contingencies
Total liabilities not
subject to compromise 328,947 100,502
------------------- -------------------
Liabilities subject to
compromise -- 600,996
-------------------
Total liabilities 328,947 701,498
------------------- -------------------
Stockholders' equity:
Predecessor preferred stock -- 500
Predecessor common stock -- 1,398
Predecessor capital in
excess of par value -- 766,347
Predecessor accumulated
other comprehensive income
(loss) -- (6,879)
Successor common stock 150 --
Successor capital in excess
of par value 347,340 --
Successor accumulated other
comprehensive income (loss) (98) --
Retained earnings
(accumulated deficit) 6,509 (634,450)
------------------- -------------------
Total stockholders' equity 353,901 126,916
-------------------
Total liabilities and
stockholders' equity $ 682,848 $ 828,414
=== ============== ==== =============
PARKER DRILLING COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Successor Predecessor
---------------
Three Months Three Months Three Months
Ended December Ended September Ended December
31, 30, 31,
---------------- ---------------- ---------------
2019 2019 2018
---------------- ---------------- ---------------
Revenues 156,281 160,083 129,148
Expenses:
Operating
expenses 124,040 117,486 100,993
Depreciation
and
amortization 20,779 20,329 24,340
144,819 137,815 125,333
Total operating
gross margin 11,462 22,268 3,815
---------------- ---------------- -------------
General and
administrative
expense (6,374) (5,983) 4,439
Loss on
impairment -- -- (6,708)
Gain (loss) on
disposition of
assets, net 371 (92) (1,598)
Pre-petition
restructuring
charges -- -- (21,820)
Reorganization
items -- (211) (9,789)
---------------- ---------------- -------------
Total operating
income (loss) 5,459 15,982 (31,661)
---------------- ---------------- -------------
Other income
(expense):
Interest
expense (6,121) (7,118) (8,778)
Interest income 151 362 15
Other 714 (258) (414)
Total other
income
(expense) (5,256) (7,014) (9,177)
Income (loss)
before income
taxes 203 8,968 (40,838)
---------------- ---------------- -------------
Income tax
expense
Current tax
expense 1,621 3,031 2,118
Deferred tax
expense
(benefit) 703 1,948 117
Total income
tax expense 2,324 4,979 2,235
---------------- ---------------- -------------
Net income
(loss) (2,121) 3,989 (43,073)
Less:
Predecessor
preferred stock
dividend -- -- --
Net income
(loss)
available to
common
stockholders $ (2,121) $ 3,989 $ (43,073)
==== ========== ==== ========== =========
Basic earnings
(loss) per
common share: $ (0.14) $ 0.27 $ (4.60)
Diluted
earnings
(loss) per
common share: $ (0.14) $ 0.27 $ (4.60)
Number of
common shares
used in
computing
earnings per
share:
Basic 15,045,276 15,044,739 9,367,697
Diluted 15,170,356 15,044,739 9,367,697
PARKER DRILLING COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Successor Predecessor
----------------
Nine Months Three Months
Ended December Ended March Year Ended
31, 31, December 31,
---------------- -------------- -----------------
2019 2019 2018
---------------- -------------- -----------------
Revenues $ 472,395 $ 157,397 $ 480,821
Expenses:
Operating
expenses 354,175 120,871 378,104
Depreciation
and
amortization 61,499 25,102 107,545
---------------- -------------- ---------------
415,674 145,973 485,649
---------------- -------------- ---------------
Total operating
gross margin 56,721 11,424 (4,828)
---------------- -------------- ---------------
General and
administrative
expense (17,967) (8,147) (24,545)
Loss on
impairment -- -- (50,698)
Gain (loss) on
disposition of
assets, net 226 384 (1,724)
Pre-petition
restructuring
charges -- -- (21,820)
Reorganization
items (1,173) (92,977) (9,789)
---------------- -------------- ---------------
Total operating
income (loss) 37,807 (89,316) (113,404)
---------------- -------------- ---------------
Other income
(expense):
Interest
expense (20,902) (274) (42,565)
Interest income 887 8 91
Other (188) (10) (2,023)
---------------- -------------- ---------------
Total other
income
(expense) (20,203) (276) (44,497)
---------------- -------------- ---------------
Income (loss)
before income
taxes 17,604 (89,592) (157,901)
---------------- -------------- ---------------
Income tax
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