Transcript Concept 6B : Land Rig on Island

IPAA
2005 Oil & Gas
Investment
Symposium
April 18, 2005
Robert L. Parker Jr – President & CEO
David C. Mannon – Sr. VP & COO
Forward Looking Statements
The following presentation contains certain statements that may be
deemed to be “forward-looking statements” within the meaning of the
Securities Acts. All statements, other than statements of historical facts,
that address activities, events or developments that the Company expects,
projects, believes or anticipates will or may occur in the future, the outlook
for rig utilization and dayrates, general industry conditions including
bidding activity, future operating results of the Company’s rigs and rental
tool operations, capital expenditures, asset sales, expansion and growth
opportunities, financing activities, debt repayment and other such matters,
are forward-looking statements. Although the Company believes that its
expectations stated in this presentation are based on reasonable
assumptions, actual results may differ materially from those expressed or
implied in the forward-looking statements. For a more detailed discussion
of risk factors, please refer to the Company’s reports filed with the SEC,
and in particular, the report on Form 10-K for the year ended December
31, 2004. Each forward-looking statement speaks only as of the date of
this presentation, and the Company undertakes no obligation to publicly
update or revise any forward-looking statement.
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Investment Highlights
 Geographic and asset diversification
 Significant presence in core international markets
 High margin rental tool business
 Outstanding safety record
 New COO added to management team
 Favorable industry outlook
3
Parker Drilling Overview
 Leading worldwide provider of contract drilling and related
services
 Among the most geographically diverse drilling contractors in the
world – operated in 51 countries and U.S. since inception in 1934
 Reputation for operational expertise and experience in drilling in
unique and challenging environments
 Core operating areas include:
 International land drilling focused in CIS, Asia Pacific and Mexico
regions
 International barge drilling focused in Caspian Sea, Mexico and
Nigeria transition zones
 U.S. barge drilling in GOM
 Quail Tools provides premium rental tools for land and
offshore drilling and workover activities
 High margin business serving major and independent producers in
the GOM, South Texas, West Texas and Rocky Mtn. Regions
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Business Strategies
 Today:
 Reduce debt an additional $65MM to achieve goal of $200MM
debt reduction
 Seek to increase utilization and dayrates
 Manage costs / minimize capital expenditures
 Tomorrow:
 Pursue strategic growth opportunities
5
Recent Developments
 January 2005 – Sold jackup rig 25 for $21.5 million
 Proceeds used to call $25 million of 10.125% effective 2/7/05
 December 2004 –David C. Mannon appointed Chief Operating
Officer
 September 2004 – Issued $150 million Floater Notes
 Proceeds used to pay off $70 million Term Loan and repurchase
$80 million of 10.125% Notes
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Significantly Reduce Debt
 Goal: total debt reduction of $200 million from 12/31/02 balance
 Asset sales, cash on hand, operating cash flows
 Debt reduction of approximately $135 million completed
Parker Drilling Historical Debt Balances
$600
$590
$571
$572
$ Millions
$550
$526
$500
$481
$456
$450
$400
12/31/02
6/30/03
12/31/03
6/30/04
12/31/04
Current
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Utilization Trend
90%
80%
70%
76%
75%
74%
61%
60%
47%
50%
46%
41%
40%
39%
38%
30%
20%
1Q 03
2Q 03
3Q 03
Barge Rigs
1Q 04
4Q 03
2Q 04
International Rigs
Note: Adjusted for new Marketable Rig Count
3Q 04
4Q 04
Current
Total Utilization
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EBITDA Multiples
As of April 11, 2005
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
Transocean ENSCO
TODCO
Nabors Patterson
2005
HP
Precision Grey Wolf
Pride
Parker
2006
* EBITDA multiples are used to quantify the premium value placed on a company’s stock.
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Company Focus
 Quality Management Systems
 Processes
 Internal Controls
 Safety - for our people and the environment
 Downtime – reduce through preventative maintenance
program and fleet standardization
 Utilization – increase through rationalization of our assets
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Geographic and Asset Diversification
Russia
Kazakhstan
Turkmenistan
Quail Tools
Gulf of Mexico
Bangladesh
Mexico
Kuwait
Colombia
Nigeria
Peru
Land
Chad
Barge
Project Management
Sakhalin
Island
China
Papua New
Guinea
Indonesia
New
Zealand
Labor Contract
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Revenue and EBITDA Sources
Revenues
EBITDA
2004
2004
Discontinued Ops
8%
US Offshore
22%
Discontinued Ops
6%
Latin Am. 2%
Asia Pacific 11%
Latin Am. 9%
US Offshore
26%
Asia Pacific
11%
Quail
16%
CIS
26%
Int’l Offshore
8%
CIS
30%
Quail
29%
Int’l Offshore
(4%)
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Outlook
 Debt reduction process is ongoing
 Remain committed to reducing debt by $200 million
 GOM market expected to improve
 Slight increases in dayrates and utilization expected for 2005
 International markets expected to continue to improve




CIS experiencing increased activity; Parker’s presence growing
Asia-Pacific activity improving in selected markets
8 Rigs contracted in Mexico for long-term work
Opportunities in North Africa and Middle East
 Outlook for Quail Tools is positive
 Continued improvement in GOM rental activity
 Rocky Mountain location continues to grow
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Increase Utilization
 Utilization rates increased in 2004 and are expected to
improve from current levels during 2005
 GOM barges currently operating at 74% utilization
 Barge rig 72 has been relocated from Nigeria to GOM
 Contract in Mexico significantly increased utilization of
international land rig fleet. Full impact in 2005.
 International barge rig utilization has increased recently:
 Barge rig 257 in the Caspian Sea
 Barge rigs 75 and 73 in Nigeria
 5-Year Strategic Growth Plan
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Status of GOM Business
Rig Type
Utilization
Current
4Q04
3Q04
Deep Barges
9/9
$ 25,800
$ 22,700
$ 20,900
Interm. Barges
3/4
$ 19,800
$ 17,700
$ 16,100
Workover Barges
2/6
$ 12,700
$ 11,800
$ 12,300
14/19 = 74% Utilization
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High Margin Rental Tool Business
 Quail Tools provides premium rental tools for deep water and
land drilling operations
 Consistent high margin business even during down cycles
 Significant contributor to Parker Drilling’s cash flow
 Four locations: Louisiana, South Texas, West Texas and
Wyoming – also services Barnett Shale in North Texas
 Tools rented Internationally – Mexico & Sakhalin Island
($ in thousands)
2001
2002
2003
2004
Revenues
$65,629
$47,510
$54,637
$67,167
Gross Profit
$42,624
$25,700
$31,586
$39,130
64.9%
54.1%
57.8%
58.2%
Gross Margins
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Quail Tools
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CROSSOVER SUB
KELLY SPINNER
UPPER KELLY COCK
ELEVATOR
ELEVATOR LINKS
ROTARY HOSE
KELLY
LOWER KELLY COCK
SAVER SUB
REMOTE CONTROL
PANEL
STABBING GUIDE
KELLY BUSHING
MUD BUCKET
SLIPS & TONGS
BLOW-OUT
PREVENTERS
ACCUMULATOR
UNIT
CHOKE
MANIFOLD
DRILL PIPE
HEAVY WT. DRILL PIPE
DRILL COLLARS
STABILIZERS
BIT SUBS
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TUBING
Outstanding Safety Record
Total Recordable Incidence Rate (1)
5
4
3
IADC
Parker
2
1
0
1998
1999
2000
2001
2002
2003
2004
(1) TRIR = Recordable Incidents/100 Workers per Year
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Near-Term Focus
 Continue to manage costs
 Minimize capital expenditures
 Will be approximately $60 million in 2005
 Limit to maintenance and high return projects
 Active preventive maintenance program
 Continue to focus on Balance Sheet improvement
 Begin to pursue prudent growth plan
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Favorable Industry Outlook
 The strength of oil and gas prices resulted in improvements to
dayrates and utilizations in most of the Company’s drilling
markets in 2004
 During 2003 E & P companies addressed a number of issues
including debt reduction and lack of acceptable well prospects
 Continued strength in commodity prices should support
improving worldwide rig count.
 E & P expenditures expected to increase in near future(1)
 International E & P spending growth
• 2005 estimate of 9% vs. 2004 actual of 11%
 Domestic E & P spending growth
• 2005 estimate of 14% vs. 2004 actual of 16%
(1) Based on industry research
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