Parker Drilling Company (
Q4 2010 Earnings Conference Call
February 23, 2011, 11:00 am ET
Richard Bajenski – IR
Bobby Parker – Executive Chairman
David Mannon – CEO
Kirk Brassfield – SVP and CFO
Tom Curran – Wells Fargo
Previous Statements by PKD
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» Parker Drilling Company Q4 2009 Earnings Call Transcript
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Parker Drilling Fourth Quarter 2010 Conference Call. During today’s presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions) This conference is being recorded today, Wednesday, February 23, 2011.
I would now like to turn the conference over to Richard Bajenski, Director of Investor Relations. Please go ahead sir.
Thank you operator and good morning to our audience and thank you for joining the Parker Drilling fourth quarter 2010 conference call. This is Rich Bajenski, Director of Investor Relations, joining me today are Bobby Parker; Executive Chairman, Dave Mannon; President and Chief Executive Officer, and Kirk Brassfield; Senior Vice President and Chief Financial Officer.
In the course of our comments today, we will make statements regarding management’s expectations for the Company’s future performance that we believe will be informative and beneficial to our shareholders. These statements are considered forward-looking statements within the meaning of the Securities Act. Each forward-looking statement speaks only as of the date of this call, and actual results may differ materially due to various factors we have referenced in our public filings and other factors addressed during this call, including changes in market conditions affecting our industry.
We will also refer to non-GAAP financial measures, such as adjusted EBITDA and non-routine items. Please refer to the table in our current press release, or on the Company’s website for a definition of adjusted EBITDA and a reconciliation of this measure to the comparable GAAP measure and also for further information regarding non-routine items.
Here to us start off, is Bobby Parker to begin our review. Bobby?
Thanks Rich, and welcome to our conference call and good morning everybody. Earlier today, we reported our 2010 fourth quarter results. Dave Mannon and Kirk Brassfield will review the operating and financial details and discuss our outlook in a moment.
Before they do that, I have a few thoughts to share on current events that are shaping our business and we believe are of interest to our investors. A de facto [ph] or a moratorium on deep-water drilling in the Gulf of Mexico continued. Fortunately it has had little impact on Parker’s Gulf of Mexico barge drilling business or rental tools business. Barge drilling occurred mostly in state waters of Louisiana and Texas. Since the Macondo oil spill, both states have made revisions to the regulations and oversight practices.
Drillers like Parker have made adjustments to meet the change in regulations and permits continue to be processed and issued with no significant interruption. There appears to be little impact on the barge drilling market. The offshore drilling market that has certainly been affected, Gulf of Mexico drillers do rent equipment primarily landing strings and drill pipes. The stand still and deepwater drilling and the decline in shelf drilling have impacted what was a growing piece of business for our rental tools prior to the Macondo oil spill.
We believe that this initially led to about $1 million per month of lower revenues for rental tools. This impact has diminished as some equipment have moved with rigs that left the Gulf for jobs else where, or we have replaced it with other business. In the US, on land, the increase in lateral drilling, whether in new shale plays or is happening increasingly in conventional oil and gas fields has been a boom to rental tool equipment suppliers.
More lateral drilling is being done and the laterals are getting longer, require more pipe per well and keeping the pipe in the hole for longer periods of time. The net result has been more demand for rental tools. Internationally, we're all attentive to the events unfolding in North Africa.
Parker’s only assets in the region are in Algeria where we have two rigs currently stacked.
So far the safety of our people and the security of our assets or our opportunity for future work in Algeria do not appear to be threatened. The future of drilling in Kazakhstan remains caught up in the country's financial difficulties. We believe that this market has potential for Parker and we are exploring opportunities to improve the regions rig utilization in the short-term.
Lastly, in South America, we are encouraged by the growing EMP spending in Colombia and recent discoveries and plans for expanded EMP activity in Argentina. Some of the work in both these countries requires high horsepower rigs capable of drilling deep and also in remote and challenging locations, just what Parker rigs are designed for and our crews are experienced in.
Increasing demand in the region should be beneficial for Parker and while we do have a recent success to report. Earlier this month, we have signed a contract for new work in Colombia and will be mobilizing into Colombia a rig that was recently idled in Mexico. That concludes my remarks; I will now turn it over to Dave Mannon to discuss our operating performance and our outlook, Dave.
Thanks Bobby. The highlight of this past quarter was the performance of our rental tools segment which achieved new highs in revenues, EBITDA and gross margin as a percent of revenues which resulted in a record year for rental tools. The Quail team has done a superb job in the execution of their strategy and they have produced excellent returns on Parker investments and the people and resources that supported this achievement.