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): November 3, 2015
 
PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
 
 
Delaware
(State or other jurisdiction of
incorporation or organization)
 
73-0618660
(I.R.S. Employer Identification No.)
 
 
5 Greenway Plaza, Suite 100, Houston, Texas 77046
 
(Address of principal executive offices) (Zip code)
 
(281) 406-2000
 
(Registrant’s telephone number, including area code)
 
Not Applicable
 
(Former Address if Changed Since Last Report)
 
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 November 3, 2015, Parker Drilling Company (the “Registrant”) issued a press release announcing results of operations for the third quarter ended September 30, 2015.
 
A copy of this press release is attached as Exhibit 99.1 to this Report on Form 8-K. This information is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits
 
(d) Exhibits.

The following exhibit is furnished herewith:

99.1 Press release dated November 3, 2015, issued by the Registrant.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
Parker Drilling Company
 
 
Date:
November 3, 2015
By:  
/s/ Christopher T. Weber
 
 
 
 
Christopher T. Weber
 
 
 
 
Senior Vice President and
Chief Financial Officer
 
 






EXHIBIT 99.1

Parker Drilling Reports 2015 Third Quarter Results
HOUSTON, November 3, 2015 - Parker Drilling Company (NYSE: PKD) today announced a net loss of $48.6 million, or a $0.40 loss per share on revenues of $173.4 million for the third quarter ended September 30, 2015.  The net loss includes a $36.6 million non-cash valuation allowance taken primarily against U.S. foreign tax credits and certain foreign net operating losses that accounted for $0.30 of the reported loss per share. While the carry-forwards have been reserved on the Company's financial statements, they have not expired and remain available to offset future cash taxes. Excluding this valuation allowance, the adjusted loss per share was $0.10.
Third quarter adjusted EBITDA was $35.4 million, compared with $32.8 million for the preceding quarter.
Gary Rich, Chairman, President and CEO, said, “Both our adjusted EBITDA and our adjusted EBITDA as a percentage of revenue increased sequentially primarily due to strong results from our International & Alaska Drilling segment. In addition, we continued to benefit from company-wide cost efficiencies undertaken during the course of the year.
"From an outlook perspective, we anticipate that continued uncertainty over commodity prices will lead to further declines in customer spending and pricing during the remainder of the year. As a result, we anticipate lower activity for our drilling services and rental tools services businesses, which will drive lower operating results in the fourth quarter.
"We continue to manage our business as if this downturn will persist through 2016. Throughout this year, we have taken proactive steps to achieve our goal of generating free cash flow, including head count and operating expense reductions, maintaining our working capital diligence and reducing capital expenditures while striving to sustain utilization and market share. In addition, previously-announced amendments to our credit facility preserve our financial flexibility and enhance our position in this uncertain market. I believe our balanced profile of product and service mix, geographic diversity and backlog are enabling us to perform better than most of our peers. With our solid balance sheet and prudent management during this downturn, we believe we are positioned to grow once the market environment stabilizes and the outlook improves," Mr. Rich concluded.
Third Quarter Review
Parker Drilling's revenues for the 2015 third quarter, compared with the 2015 second quarter, decreased 6.7 percent to $173.4 million from $185.9 million, operating gross margin excluding depreciation and amortization expense (gross margin) increased 5.0 percent to $44.4 million from $42.3 million and gross margin as a percentage of revenues was 25.6 percent, compared with 22.8 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 International & Alaska Drilling segments, revenues declined 4.3 percent to $116.6 million from $121.8 million, gross margin increased 31.4 percent to $27.2 million from $20.7 million, and gross margin as a percentage of revenues was 23.3 percent, compared with 17.0 percent for the prior period.
U.S. (Lower 48) Drilling
U.S. (Lower 48) Drilling segment revenues were $6.0 million, an 11.8 percent decrease from 2015 second quarter revenues of $6.8 million. Gross margin was a $1.9 million loss as compared with a 2015 second quarter gross margin loss of $2.0 million. The declines in revenues were primarily the result of lower activity in the Company's California O&M business, while gross margin improved as a result of slightly higher utilization and lower costs in the Gulf of Mexico drilling barge business.
International & Alaska Drilling
International & Alaska Drilling segment revenues were $110.7 million, a 3.7 percent decrease from 2015 second quarter revenues of $115.0 million. Gross margin was $29.1 million, a 28.8 percent increase from 2015 second quarter gross margin of $22.6 million. Gross margin as a percentage of revenues was 26.3 percent as compared with 19.7 percent in the 2015 second quarter. The decrease in revenues is attributable to a $7.1 million decrease in reimbursable expenses and lower Eastern Hemisphere rig utilization, partially offset by an increase in Latin America utilization and project services activities. The increase in gross margin is due to the increase in Latin America utilization and project services activities along with lower operating expenses.
Rental Tools Services
Rental Tools segment revenues were $56.8 million, an 11.4 percent decrease from 2015 second quarter revenues of $64.1 million. Gross margin was $17.2 million, a 20.7 percent decrease from 2015 second quarter gross margin of $21.7 million. Gross margin as a percentage of revenues was 30.3 percent as compared with 33.9 percent in the 2015 second quarter. Reduced revenues and gross margin were primarily due to the continued decline in U.S. land drilling activity, as well as lower pricing and business mix in certain international rental tools markets.


General and Administrative expense decreased to $8.9 million for the 2015 third quarter, from $9.5 million for the 2015 second quarter.
Capital expenditures in third quarter were $17.9 million, and year-to-date through September 30, 2015 were $72.5 million.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Wednesday, November 4, 2015, to review reported results.  The call will be available by telephone at (888) 287-5563, access code 235454.  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 or by telephone for 1 week from November 4, 2015 at (888) 203-1112, using the access code 235454#.
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.
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 Drilling-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, (281) 406-2310, jason.geach@parkerdrilling.com; or Greg Rosenstein, Director of Investor Relations, (281) 406-2030, greg.rosenstein@parkerdrilling.com.



PARKER DRILLING COMPANY
Consolidated Condensed Balance Sheets
(Dollars in Thousands, Except Per Share Data)
 
 
 
 
 
September 30, 2015
 
December 31, 2014
 
(Unaudited)
 
 
ASSETS
 
 
 
CURRENT ASSETS
 
 
 
Cash and Cash Equivalents
$
104,651

 
$
108,456

Accounts and Notes Receivable, Net
224,996

 
270,952

Rig Materials and Supplies
38,516

 
47,943

Deferred Costs
2,961

 
5,673

Deferred Income Taxes
5,448

 
7,476

Other Current Assets
25,033

 
29,279

TOTAL CURRENT ASSETS
401,605

 
469,779

 
 
 
 
PROPERTY, PLANT AND EQUIPMENT, NET
841,923

 
895,940

 
 
 
 
OTHER ASSETS
 
 
 
Deferred Income Taxes
133,058

 
122,689

Other Assets
65,597

 
32,251

TOTAL OTHER ASSETS
198,655

 
154,940

 
 
 
 
TOTAL ASSETS
$
1,442,183

 
$
1,520,659

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
CURRENT LIABILITIES
 
 
 
Current Portion of Long-Term Debt
$
—

 
$
10,000

Accounts Payable and Accrued Liabilities
150,170

 
168,665

TOTAL CURRENT LIABILITIES
150,170

 
178,665

 
 
 
 
LONG-TERM DEBT
585,000

 
605,000

 
 
 
 
LONG-TERM DEFERRED TAX LIABILITY
75,197

 
52,115

 
 
 
 
OTHER LONG-TERM LIABILITIES
20,141

 
18,665

 
 
 
 
TOTAL CONTROLLING INTEREST IN STOCKHOLDERS' EQUITY
606,498

 
662,431

Noncontrolling interest
5,177

 
3,783

TOTAL EQUITY
611,675

 
666,214

 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,442,183

 
$
1,520,659

 
 
 
 
 
 
 
 
Current Ratio
2.67

 
2.63

 
 
 
 
Total Debt as a Percent of Capitalization
49
%
 
48
%
 
 
 
 
Book Value Per Common Share
$
4.92

 
$
5.43




PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
 
 
 
 
 
Three Months Ended June 30,
 
Three Months Ended September 30,
 
 
2015
 
2014
 
2015
 
 
 
 
 
 
REVENUES
$
173,418

 
$
242,012

 
$
185,941

 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
Operating Expenses
128,963

 
160,797

 
143,569

Depreciation and Amortization
39,584

 
36,149

 
38,351

 
168,547

 
196,946

 
181,920

TOTAL OPERATING GROSS MARGIN
4,871

 
45,066

 
4,021

 
 
 
 
 
 
General and Administrative Expense
(8,895
)
 
(9,370
)
 
(9,511
)
Provision for Reduction in Carrying Value of Certain Assets
(906
)
 
—

 
(2,316
)
Gain (Loss) on Disposition of Assets, Net
383

 
(457
)
 
(138
)
TOTAL OPERATING INCOME
(4,547
)
 
35,239

 
(7,944
)
 
 
 
 
 
 
OTHER INCOME AND (EXPENSE):
 
 
 
 
 
Interest Expense
(11,293
)
 
(10,848
)
 
(11,396
)
Interest Income
7

 
36

 
19

Other
(719
)
 
(536
)
 
(1,529
)
TOTAL OTHER EXPENSE
(12,005
)
 
(11,348
)
 
(12,906
)
 
 
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES
(16,552
)
 
23,891

 
(20,850
)
 
 
 
 
 
 
INCOME TAX EXPENSE (BENEFIT)
31,930

 
11,014

 
(6,916
)
 
 
 
 
 
 
NET INCOME (LOSS)
(48,482
)
 
12,877

 
(13,934
)
Less: net income attributable to noncontrolling interest
138

 
311

 
95

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST
$
(48,620
)
 
$
12,566

 
$
(14,029
)
 
 
 
 
 
 
EARNINGS PER SHARE - BASIC
 
 
 
 
 
Net Income (loss)
$
(0.40
)
 
$
0.10

 
$
(0.11
)
 
 
 
 
 
 
EARNINGS PER SHARE - DILUTED
 
 
 
 
 
Net Income (loss)
$
(0.40
)
 
$
0.10

 
$
(0.11
)
 
 
 
 
 
 
NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE
 
 
 
 
 
Basic
122,933,518

 
121,523,674

 
122,481,425

Diluted
122,933,518

 
123,177,753

 
122,481,425





PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
 
 
 
 
 
Nine Months Ended September 30,
 
2015
 
2014
 
 
 
 
REVENUES
$
563,435

 
$
725,471

 
 
 
 
EXPENSES:
 
 
 
Operating Expenses
411,802

 
501,391

Depreciation and Amortization
118,474

 
106,666

 
530,276

 
608,057

TOTAL OPERATING GROSS MARGIN
33,159

 
117,414

 
 
 
 
General and Administrative Expense
(29,243
)
 
(25,341
)
Provision for Reduction in Carrying Value of Certain Assets
(3,222
)
 
—

Gain on Disposition of Assets, Net
2,686

 
433

TOTAL OPERATING INCOME
3,380

 
92,506

 
 
 
 
OTHER INCOME AND (EXPENSE):
 
 
 
Interest Expense
(33,767
)
 
(33,486
)
Interest Income
209

 
156

Loss on extinguishment of debt
—

 
(30,152
)
Other
(3,628
)
 
1,391

TOTAL OTHER EXPENSE
(37,186
)
 
(62,091
)
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES
(33,806
)
 
30,415

 
 
 
 
INCOME TAX EXPENSE (BENEFIT)
24,832

 
14,093

 
 
 
 
NET INCOME (LOSS)
(58,638
)
 
16,322

Less: net income attributable to noncontrolling interest
789

 
624

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST
$
(59,427
)
 
$
15,698

 
 
 
 
EARNINGS PER SHARE - BASIC
 
 
 
Net Income (loss)
$
(0.49
)
 
$
0.13

 
 
 
 
EARNINGS PER SHARE - DILUTED
 
 
 
Net Income (loss)
$
(0.49
)
 
$
0.13

 
 
 
 
NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE
 
 
 
Basic
122,430,957

 
120,994,728

Diluted
122,430,957

 
122,972,014

 
 
 
 




PARKER DRILLING COMPANY
Selected Financial Data
(Dollars in Thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
September 30,
 
June 30,
 
 
 
2015
 
2014
 
2015
 
 
 
 
 
 
 
 
REVENUES:
 
 
 
 
 
 
Drilling Services:
 
 
 
 
 
 
U.S. (Lower 48) Drilling
 
$
5,961

 
$
44,409

 
$
6,848

International & Alaska Drilling
 
110,661

 
109,892

 
114,969

 
Total Drilling Services
 
116,622

 
154,301

 
121,817

Rental Tools
 
56,796

 
87,711

 
64,124

 
  Total Revenues
 
$
173,418

 
$
242,012

 
$
185,941

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
Drilling Services:
 
 
 
 
 
 
U.S. (Lower 48) Drilling
 
$
7,820

 
$
22,687

 
$
8,829

International & Alaska Drilling
 
81,586

 
86,123

 
92,329

 
Total Drilling Services
 
89,406

 
108,810

 
101,158

Rental Tools
 
39,557

 
51,987

 
42,411

 
  Total Operating Expenses
 
$
128,963

 
$
160,797

 
$
143,569

 
 
 
 
 
 
 
 
OPERATING GROSS MARGIN:
 
 
 
 
 
 
Drilling Services:
 
 
 
 
 
 
U.S. (Lower 48) Drilling
 
$
(1,859
)
 
$
21,722

 
$
(1,981
)
International & Alaska Drilling
 
29,075

 
23,769

 
22,640

 
Total Drilling Services
 
27,216

 
45,491

 
20,659

Rental Tools
 
17,239

 
35,724

 
21,713

Depreciation and Amortization
 
(39,584
)
 
(36,149
)
 
(38,351
)
 
  Total Operating Gross Margin
 
$
4,871

 
$
45,066

 
$
4,021





PARKER DRILLING COMPANY
Adjusted EBITDA
(Dollars in Thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Controlling Interest
 
$
(48,620
)
 
$
(14,029
)
 
$
3,222

 
$
7,753

 
$
12,566

Adjustments:
 
 
 
 
 
 
 
 
 
 
Income Tax (Benefit) Expense
 
31,930

 
(6,916
)
 
(182
)
 
9,983

 
11,014

Interest Expense
 
11,293

 
11,396

 
11,078

 
10,779

 
10,848

Other Income and Expense
 
712

 
1,510

 
1,197

 
(1,187
)
 
500

(Gain) Loss on Disposition of Assets, Net
 
(383
)
 
138

 
(2,441
)
 
(621
)
 
457

Depreciation and Amortization
 
39,584

 
38,351

 
40,539

 
38,455

 
36,149

Provision for Reduction in Carrying Value of Certain Assets
 
906

 
2,316

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA*
 
35,422

 
32,766

 
53,413

 
65,162

 
71,534

 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
Non-routine Items
 
—

 
—

 
—

 
—

 
(1,250
)
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA after Non-routine Items
 
$
35,422

 
$
32,766

 
$
53,413

 
$
65,162

 
$
70,284


*Adjusted EBITDA, a non-GAAP financial measure, excludes items that management believes are of a non-routine nature and which detract from an understanding of normal operating performance and comparisons with other periods. Management also believes that results excluding these items are more comparable to estimates provided by securities analysts and used by them in evaluating the Company's performance.





PARKER DRILLING COMPANY
Reconciliation of Adjusted Earnings Per Share
(Dollars in Thousands, except Per Share)
(Unaudited)
 
 
 
Three Months Ended
 
 
 
September 30,
 
June 30,
 
 
 
2015
 
2014
 
2015
 
 
 
 
 
 
 
 
Net income attributable to controlling interest
 
$
(48,620
)
 
$
12,566

 
$
(14,029
)
 Earnings per diluted share
 
$
(0.40
)
 
$
0.10

 
$
(0.11
)
 
 
 
 
 
 
 
 
 Adjustments:
 
 
 
 
 
 
 
 Escrow clawback
 
$
—

 
$
(1,250
)
 
$
—

 
Provision for reduction in carrying value of certain assets **
 
—

 
—

 
2,316

 
Valuation allowance
 
36,632

 
—

 
—

 
           Total adjustments
 
36,632

 
(1,250
)
 
2,316

 
 Tax effect of adjustments
 
—

 
500

 
(443
)
 
           Net adjustments
 
36,632

 
(750
)
 
1,873

 
 
 
 
 
 
 
 
 Adjusted net income attributable to controlling interest*
 
$
(11,988
)
 
$
11,816

 
$
(12,156
)
 Adjusted earnings per diluted share
 
$
(0.10
)
 
$
0.10

 
$
(0.10
)

*Adjusted net income, a non-GAAP financial measure, excludes items that management believes are of a non-routine nature and which detract from an understanding of normal operating performance and comparisons with other periods. Management also believes that results excluding these items are more comparable to estimates provided by securities analysts and used by them in evaluating the Company's performance.  

**The three months ended September 30, 2015 excludes provision for reduction in carrying value of certain assets of $0.9 million ($0.5 million, net of tax) deemed not meaningful to adjusted earnings per diluted share for the period.