HOUSTON, Feb. 14, 2018 /PRNewswire/ — Parker Drilling Company (NYSE: PKD) today announced results for the fourth quarter ended December 31, 2017, including a reported net loss of $29.6 million, or a $0.21 loss per share, on revenues of $116.3 million.
The net loss includes a non-cash pre-tax loss of $4.3 million of asset and inventory write-offs associated with the sale of a rig in Papua New Guinea and $3.3 million of asset and inventory write-offs associated with select international drilling assets. Excluding these items, the adjusted net loss was $22.0 million, or a $0.16 loss per share.
Fourth quarter Adjusted EBITDA was $22.4 million.
“The year ended on a strong note, thanks in large part to the continuing growth in our Rental Tools Services business,” said Gary Rich, the Company’s Chairman, President and CEO. “While 2017 was another challenging year for the oilfield services sector, compared to 2016, Parker Drilling increased gross margin, excluding depreciation and amortization, by 35 percent on essentially flat revenue by maintaining diligent focus on cost control. We also worked to maintain liquidity by focusing on working capital and finished the year with $141.5 million in cash, almost $22 million greater than when we started the year.
“I am proud of our accomplishments and believe we have fundamentally streamlined our cost structure to best position the company for continued strength going forward. We remain optimistic about our future as we continue to see increasing signs of a recovery taking hold,” concluded Rich.
Fourth Quarter Review
Parker Drilling’s revenues for the 2017 fourth quarter, compared with the 2017 third quarter, decreased 1.7 percent to $116.3 million from $118.3 million. Operating gross margin, excluding depreciation and amortization expense (gross margin), decreased 19.2 percent to $24.4 million from $30.2 million and gross margin as a percentage of revenues was 21.0 percent, compared with 25.5 percent for the prior period.
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 declined 7.6 percent to $62.2 million from $67.3 million. Gross margin decreased 54.6 percent to $5.4 million from $11.9 million and gross margin as a percentage of revenues was 8.7 percent, compared with 17.7 percent for the prior period. Contracted backlog was $241 million at the end of the fourth quarter compared with $257 million at the end of the 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 were $54.1 million, a 6.1 percent increase from 2017 third quarter revenues of $51.0 million. Gross margin was $19.1 million, a 4.4 percent increase from $18.3 million for the 2017 third quarter. Gross margin as a percentage of revenues was 35.3 percent as compared with 35.9 percent in the 2017 third quarter.
General and Administrative expense decreased to $5.1 million for the 2017 fourth quarter, from $7.0 million for the 2017 third quarter, predominately due to incentive plan adjustments.
Capital expenditures in the fourth quarter were $9.7 million, and were $54.5 million for the year.
Credit Facility Amendment
On February 14, 2018, the Company executed an amendment to the 2015 Secured Credit Agreement, modifying the credit facility to an Asset-Based Lending (ABL) structure and reducing the size of the revolver from $100 million to $80 million. The amendment eliminates the financial maintenance covenants required in the 2015 Secured Credit Agreement and replaces them with a liquidity covenant and a monthly borrowing base calculation based on eligible rental equipment and eligible domestic accounts receivable. The liquidity covenant requires the Company to maintain a minimum of $30 million of liquidity (defined as availability under the borrowing base and cash on hand), of which $15 million is restricted, resulting in a maximum availability at any one time of $65 million. The amendment also allows greater flexibility to refinance the Company’s existing Senior Notes on either a secured or unsecured basis.
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, February 15, 2018, to review reported results. You may access the call by telephone at (+1) (412) 902-0003 and asking for the 2017 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 22, 2018, at (+1) (201) 612-7415, access code 13675091#.
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.
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, firstname.lastname@example.org.
SOURCE Parker Drilling Company
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