Parker Drilling Company (PKD)
Q2 2010 Earnings Conference Call
August 5, 2010 11:00 AM ET
Kirk Brassfield – SVP and CFO
Bobby Parker – Executive Chairman
David Mannon – President and CEO
James West – Barclays Capital
David Smith – Johnson Rice
John Keller – Stephens Inc.
Eric Seeve – Golden Tree
Gary Stromberg – Barclays Capital
Steve Ferazani – Sidoti & Company
Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Parker Drilling Second Quarter 2010 Conference Call.
Previous Statements by PKD
» Parker Drilling Company Q1 2010 Earnings Call Transcript
» Parker Drilling Company Q4 2009 Earnings Call Transcript
» Parker Drilling Company Q3 2009 Earnings Call Transcript
During today’s presentation, all parties 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, Thursday, August 5, 2010.
I would now like to turn the conference over to Mr. Kirk Brassfield. Please go ahead sir.
Thank you, Alicia. Good morning and thank you for joining the Parker Drilling second quarter 2010 conference call. This is Kirk Brassfield, Senior Vice President and Chief Financial Officer. Joining me today are Bobby Parker, Executive Chairman, and David Mannon, President and Chief Executive Officer.
Rich Bajenski, our Director of Investor Relations is currently recovering from recent surgery for a broken ankle. He expects to be back in the office next week to take your calls. We wish Rich a speedy recovery.
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 for further information regarding non-routine items.
Here is Bobby Parker to begin our review. Bobby?
Thanks, Kirk, and welcome to our conference call.
Earlier today, we reported our 2010 second quarter results. David Mannon and Kirk Brassfield will review the operating and financial details of our results in a moment.
Our current outlook for global E&P trends has been tempered by recent events, while we remain encourage by solid oil fundamentals and the rapid growth of onshore U.S. drilling, the expected increase in international E&P spending has been slower to materialized principally held up by instability in European and Central Asian financial markets.
Many operators who forecast through increased drilling budgets are now hesitant to commit drilling programs until a clear picture of the long-term stability of these regions emerges.
The impact of contract drilling has not been uniform across all of our international regions, but the overall effect has been a slow deceleration of drilling activities.
Growth in our project management business, which strives on programs with much longer term horizons, has contributed to more steady results. In the U.S., the rippling effects of the Macondo oil spill and the resulting moratorium on deepwater drilling are expected to add further pressure, if more rigs depart to go for Mexico for international waters. Also concerning is the ongoing discussion of increasing taxes in the U.S. on the risk and cost intensive business of energy exploration in the face of a tenuous global economic recovery.
While Parker is minimally affected by the deepwater drilling moratorium in the Gulf through our rental tool business, has others has previously stated, I personally believe the moratorium is an overreaction that does more harm than good. The economic impact to the region and in particular the smaller companies that serve the deepwater activity are devastating.
I am confident our industry will benefit from lessons learned and further improve our operational and safety practices and hope that the moratorium is lifted very soon.
The exception to the current global outlook is the strength in U.S. land drilling as it continues to be propelled by shale drilling particularly in the liquids rich fields. The unconventional high efficiency drilling methods used to develop these fields, such as directional and lateral wells has sustained and benefited many parts of the oil fuel service sector including Parker’s onshore rental tool businesses as demonstrated in our second quarter results.
Additionally, our barge drilling segment utilization has rebounded from last year’s comparable quarter also benefiting from oil directed drilling although the rates (ph) remain depressed. While we remain optimistic about the prospects of increasing levels of international expiration activity, I do expect it to come back a little bit more slowly.
And I’d like to turn the call over to Dave Mannon. Dave?
Thanks, Bobby. Before we get into the details of the quarter, allow me to address what is probably on the minds of many of our listeners and that is how we are impacted by the recent events in the Gulf of Mexico and to clarify our relationship with BP.
I can say that so far the blowout of the Macondo well and all that has happened subsequent to that event have had little direct impact on Parker’s barge fleet. Our barge rigs, which drill in waters less than 18 feet usually, operate in inland areas, marinas (ph) and shallow waters shielded by coastal barrier islands. Our operations in these areas have not been negatively impacted so far by any oil sleeks.