Parker Drilling's Management Presents At Barclays Bank High Yield Bond And Syndicated Loan Conference (Transcript)

Parker Drilling (PKD)

Barclays Bank High Yield Bond and Syndicated Loan Conference Call

March 26, 2012 7:05 PM ET

Executives

David Tucker – Treasurer

Presentation

Unidentified Participant

Okay. Why don’t we get started with our next presenting company, we have Parker Drilling in the service space. And from Parker, we have David Tucker, Treasurer. David?

David Tucke r

Yes, thank you Gary (ph). And thank you all for attending this conference. First of all, I’d like to address apologies from Kirk Brassfield, our CFO, who is unable to attend today because of some family health issues that arose late Friday. And so, this is actually one of his favorite conferences, so he’s disappointed, he’s not available. And you effectively have the beating today. So, I’m filling in.

First of all, please pay attention to the cautionary statement presented here and realize the uncertainties that are associated with our business. The agenda today, I’ll review our business strategies, look over our operations, and then, review some of the financial performance that we’ve had.

Before I step into the actual presentation though, I’d like to make a brief comment regarding the recent departure of our CEO and President Dave Mann, as some of you are probably aware earlier this month the board and Dave agreed to separate based on timing and execution issues regarding our strategic plan. The board is engaged in finding a successor, in the interim Bobby Parker Jr. has stepped in to the CEO and President’s role and will fulfill that role until such time as new CEO and President is appointed.

Our strategic profile, we have three points of main that we have on our strategy, achieve and maintain market leadership in select markets. Effectively you want to pick the right market with long-term visibility and growing those markets. We want to achieve execution excellence and exercise financial discipline. As many of you are aware, historically we had a very high debt to cap ratio, back in the early 2000s, high 76%, 77%, we’re now down to the low 40%.

Our business segments as you see here rental – are new and they are new as of the end of 2011. We have rental tools which looked at premium rental tools, it allows us a participation in the US resource plays and it also has high margins and we are associated in the US, in the Gulf of Mexico with some deep projects and then also international markets.

Our US Barge Drilling Segment, we are the leading barge driller in the Gulf of Mexico and we have attained that over the last few years with some investments of well over 100 million back in the ’05 to ’07 range. Our US drilling segment is set up to capture our Alaska operations which will begin later in 2012.

Our international drilling comprises the 26 land rigs that we own, our 26 rigs including one barge or two barge rigs. And it also incorporates our O&M contracts, which that’s a switch from previous segment presentation. So, we have our rigs plus that we own plus our customer owned rigs. And we are positioned in markets with long-term growth prospects.

Our technical services division applies Parker’s engineering technical expertise to E&P challenges. So, most of these projects are dealing with large, or major oil companies in very remote or difficult drilling situations where they bring in our technical expertise, our engineering department to help design executions for the – to fulfill these projects. Our competitive strengths are supported by the four pillars that we abide by Parker drilling. Those are safety, training, technology and performance.

As entailed in the safety graph, we are well below industry average safety statistics as measured by TRIR. Every meeting that we have begins, at Parker begins with a safety moment. We are – we feel that we are a leader, if not the leader, we’re among the leaders every year for the last 10 years in terms of our TRIR. And as safety program and safety statistics are very important when dealing with especially majors in drilling and for our major projects.

We have a comprehensive training program with multiple courses thought out of two facilities that we own, one is New Iberia, Louisiana and the other one in Alaska. We have technology – the technology piece is evidenced by the barge rigs that we have upgraded by some projects like Sakhalin Island and other services where we’re doing feed and technology services for E&P companies.

And then, we measure our performance. And we put this before our customers regardless of what it says, good or bad, and if it’s bad, then we apply our lessons learned technique to show improvement for the next wells that we drill for our customers.

We have a balance of revenue sources that helps grow throughout business cycles. As you can see on the left, our revenue by geography, our US operations are about 54% of our total revenue, international is 46%. Historically this graph would switch depending on the cycle. This graph is based on 2011 revenues. If we look back at 2008 or ’09, when our barge market – 2009 when our barge market was way down, it would be more weighted toward the international cycle. As international cycle increases then we would expect the international piece to pick up.

On the revenue by customer per tide (ph) you can see 44% from majors, 35% from independent, 12% from integrated services and 9% from national oil companies. Our largest customer is Exxon Mobile and different subsidiaries of theirs. If you look down at the – what I call the commodity mix meter, you can tell that most of our drilling in today’s market is for oil, 80% versus 20% for natural gas. And that’s what we would expect based on the commodity prices that we see today.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Dow Sells Off as U.S. and China Trade Tensions Escalate

Dow Sells Off as U.S. and China Trade Tensions Escalate

China Central Bank Governor Says Stay 'Calm and Rational' After Market Free Fall

China Central Bank Governor Says Stay 'Calm and Rational' After Market Free Fall

Here Is Your Market Playbook During This Tariff-Driven Selloff

Here Is Your Market Playbook During This Tariff-Driven Selloff

Dropbox Is the New Defensive Stock to Own With the Market Falling Apart

Dropbox Is the New Defensive Stock to Own With the Market Falling Apart

The Quick Answer Why Trump's Trade War Makes Stocks at Least 10% Overvalued

The Quick Answer Why Trump's Trade War Makes Stocks at Least 10% Overvalued