Parker Drilling's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Parker Drilling Company (PKD)

Q1 2012 Earnings Call

May 2, 2012 11:00 am ET


Richard Bajenski - Director, IR

Bobby Parker - Chairman, President & CEO

Kirk Brassfield - SVP & CFO


John Keller - Stephens Inc.

Daniel Burke - Johnson Rice

RJ Cruz - Trust Company of the West



Good morning ladies and gentlemen and thank you for standing by. And welcome to the Parker Drilling first quarter 2012 conference call. At this time all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session and instructions will be given at that time. (Operator Instructions) And as a reminder this call is being recorded today, May 2, 2012.

I would now like to turn the call over to Richard Bajenski. Please go ahead, sir.

Richard Bajenski

Thank you, Craig and good morning to all in our audience. Thank you for joining our conference call today. This is Richard Bajenski, Director of Investor Relations, and joining me today here at Parker are Bobby Parker, Chairman, CEO & President; 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 numbers, 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.

Bobby Parker will begin our review. Bobby?

Bobby Parker

Thanks, Rich and welcome to our conference call. Earlier today we reported our 2012 first quarter results. They were great results with increases in revenues, gross margins and gross margins percent for businesses serving the US land drilling market, US Gulf of Mexico market and the international market. I believe that we have more good results to come.

Kirk Brassfield and I will review our operational and financial performance in detail and an outlook in a moment. Beforehand though an update on some related items. First, is progress on our CEO search, that effort is underway and is being let by committee of the board. In the mean time, I have been very active in my role as interim CEO.

As I previously mentioned I will not be a place over CEO. In addition to being engaged in day-to-day operations of several projects, I am specifically focused on and expect to have completed or moving forward towards completion by the time we appoint a new CEO.

Number one, on my list is to get the Arctic Alaska Drilling Units or AADU rigs completed and working. Since stepping into this role I’ve been to Alaska twice, both times to meet with our customer BP and Anchorage and once to the North Slope for a firsthand look at rigs to discuss the completion plan for the rigs and to review our progress.

Everything appears to be on track to meet the objective we set out, when we reported our fourth quarter results. And it is to have the rigs operational ready to be turned over to BP for their acceptance testing during the 2012 third quarter. We currently are in discussion with BP to establish more specific dates.

I believe our AADU rigs will prove to be the right answer for the needs of this market and we’ll deliver a new level of safety, efficiency and consistency to the region. Also among my objectives is to reestablish momentum in our international rig fleet utilization which has been around 50% for 2012. While I am specifically focused on our idle rigs in Kazakhstan, I am mindful of the need to have a good forward plan for all of our rigs regardless of their utilization status today.

Regarding Kazakhstan, we have nine rigs in country with two currently working, for a number of reasons, political and economic. I have concerns about the long-term demand in Kazakhstan for the nine rigs we have there. Consequently, we are assessing all available options for these rigs including asset redeployment as well as potential asset sales. For example, we are currently evaluating several drilling tenders in Turkmenistan and Algeria, a suitable redeployment for some of the rigs. While it will time before any of these can be converted into operating results, my objective is to have a clear plan for these rigs and be acting on that plan.

Excluded among my objectives is to maintain the momentum in our business operation, the energy and our relationship with customers and the consistency in our communication with investors. I can assure everyone our corporate strategy and the direction of the company is unchanged and is fully supported by the board. It is understandable that there may be some uncertainty at this time. As a result the leadership team and I have stepped our communication and outreach to our employees, our customers and our shareholders.

We want everyone to understand that we expect to continue to conduct business in line with our shared strategy, objectives and goals. I am also very intent on maintaining our focus on working safe. At all level of the company, we are working diligently to keep everyone aware as a need to be watchful of their own safety as well as a safety of those that they work with and to assure that we don’t lose sight of this most important responsibility.

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