Parker Drilling Company
Filed 3/22/01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------ ------
Commission file number 1-7573
PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-0618660
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103
--------------------------------------------------------- -----
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (918) 585-8221
Securities registered pursuant Name of each exchange on which
to Section 12(b) of the Act: registered:
Common Stock, par value $.16 2/3 per share New York Stock Exchange, Inc.
------------------------------------------ ------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
As of January 31, 2001, 91,730,183 common shares were outstanding, and the aggregate market value of the common shares
(based upon the closing price of these shares on the New York Stock Exchange) held by nonaffiliates was $497.7 million.
2
|
PART I
|
PART II
|
|
|
|
PART III
|
PART IV
|
|
|
|
FINANCIAL STATEMENTS
|
|
|
PARKER DRILLING COMPANY
TABLE OF CONTENTS
Page No.
PART I
Item 1. Business 1
Item 2. Properties 13
Item 3. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 4a. Executive Officers 20
PART II
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matter 22
Item 6. Selected Financial Data 23
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 24
Item 8. Financial Statements and Supplementary Data 35
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 73
PART III
Item 10. Directors and Executive Officers of the Registrant 73
Item 11. Executive Compensation 73
Item 12. Security Ownership of Certain Beneficial Owners
and Management 73
Item 13. Certain Relationships and Related Transactions 73
PART IV
Item 14. Exhibits, Financial Statement Schedule and
Reports on Form 8-K 75
Signatures 80
3
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K contains certain statements that are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These statements may be made
directly in this document, referring to the Company, or may be "incorporated by reference", referring to other documents filed
with the Securities and Exchange Commission. All statements included in this document, 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, including future operating results, future capital expenditures and investments in the acquisition and
refurbishment of rigs and equipment, borrowings, repayment of debt, expansion and growth of operations, anticipated cost
savings, and other such matters, are forward-looking statements.
Forward-looking statements are based on certain assumptions and analyses made by the management of the Company in light
of their experience and perception of historical trends, current conditions, expected future developments and other factors they
believe are relevant. Although management of the Company believes that its assumptions are reasonable based on current
information available, they are subject to certain risks and uncertainties, many of which are outside the control of the Company.
These risks and uncertainties include worldwide economic and business conditions, fluctuations in the market prices of oil and
gas, the timing and extent of current or anticipated drilling market conditions, level of spending by oil and gas operators,
government regulations and environmental matters, international trade restrictions and political instability, operating hazards and
uninsured risks, substantial leverage, seasonality and adverse weather conditions, concentration of customer and supplier
relationships, capital expenditure overruns and delays on rig upgrade and refurbishment projects, competition, integration of
operations, successful execution of acquisition strategies and other similar factors (some of which are discussed in documents
incorporated by reference). Because the forward-looking statements are subject to these risks and uncertainties, the actual
results of operations and actions taken by the Company may differ materially from those expressed or implied by such
forward-looking statements. Each forward-looking statement speaks only as of the date of this Form 10-K, and the Company
undertakes no obligation to publicly update or revise any forward-looking statement.
PART I
Item 1. BUSINESS
GENERAL DEVELOPMENT
Parker Drilling Company was incorporated in the state of Oklahoma in 1954 after having been established in 1934 by its
founder, Gifford C. Parker. The founder was the father of Robert L. Parker, chairman and a principal stockholder, and the
grandfather of Robert L. Parker Jr., president and chief executive officer. In March 1976, the state of incorporation of the
Company was changed to Delaware through the merger of the Oklahoma corporation into its wholly-owned subsidiary Parker
Drilling Company, a Delaware corporation. Unless otherwise indicated, the term "Company" refers to Parker Drilling Company
together with its subsidiaries and "Parker Drilling" refers solely to the parent, Parker Drilling Company.
1
4
The Company is a leading worldwide provider of contract drilling and drilling related services, operating in the coastal and
transition zones of the Gulf of Mexico and Nigeria, in the offshore waters of the Gulf of Mexico and the Caspian Sea, and on
land in international oil and gas producing regions. Historically, the Company operated exclusively on land, specializing in deep,
difficult wells and drilling in remote areas. In the last four years, the Company diversified into the offshore drilling business
through the acquisition of Mallard Bay Drilling, Inc. ("Mallard"), and Hercules Offshore Corp. and Hercules Rig Corp.
(collectively, "Hercules") and the rental tool business through the acquisition of Quail Tools, Inc. ("Quail"). In 1999, the
Company sold 26 land rigs, pursuant to the Company's strategic plan to focus on offshore and international land markets where
margins are generally higher. Included were 13 lower-48 U.S. land rigs sold in September 1999 and 11 Argentina land rigs
(previously classified as assets held for disposition) sold during the fourth quarter of 1999. In 2000, the Company sold its last
U.S. land rig that was located in Alaska.
The Company's current rig fleet consists of 27 barge drilling and workover rigs, seven offshore jackup rigs, four offshore
platform rigs and 47 land rigs. The Company's barge drilling and workover rig fleet is dedicated to transition zone waters,
which are generally defined as coastal waters having depths from 5 to 25 feet. The Company's offshore jackup and platform rig
fleets currently operate in the Gulf of Mexico market. The Company's land rig fleet generally consists of premium and
specialized deep drilling rigs, with 37 of its 40 marketed land rigs capable of drilling to depths of 15,000 feet or greater. The
diversity of the Company's rig fleet, both in terms of geographic location and asset class, enables the Company to provide a
broad range of services to oil and gas operators around the world.
The oilfield service industry experienced a significant increase in activity in the year 2000. This increase was the result of an
increase in oil and gas exploration activity by major and independent oil and gas operators, particularly in North American land
markets and the Gulf of Mexico, in response to significantly higher prices for crude oil and natural gas and an increase in
demand for natural gas in the U.S. As a result, the U.S. oilfield service industry experienced a significant improvement in both
land and offshore rig utilization and in rig dayrates. This improvement in industry conditions followed a two-year period which
saw crude oil and natural gas prices fall to near-record low levels due to an oversupply of crude oil in world markets, reduced
demand for crude oil in developing countries, particularly southeast Asia, and a succession of unusually warm winters in Europe
and North America. During this time, oil and gas operators reduced their spending significantly which adversely affected the
level of oilfield activity, and in turn, the revenues of most companies in the oilfield service industry. Management is unable to
predict the duration of present market conditions, but based on a continuation of current high commodity prices and spending
by oil and gas operators, particularly in the Company's Gulf of Mexico markets, management is encouraged about prospects
for 2001.
2
5
While the level of U.S. oil and gas operators' spending increased sharply in the year 2000 for the reasons noted above,
spending, and hence, oilfield service activity has lagged in international markets. We believe this is attributable to uncertainty
regarding the stability of crude oil prices and the restructuring of oil and gas operators due to mergers. Only recently has the
Company experienced an increase in bid inquiries and contracts in its core international land markets.
TRANSITION ZONE OPERATIONS
The Company provides contract drilling services in the transition zones which are coastal waters including lakes, bays, rivers,
and marshes, of the Gulf of Mexico, the Caspian Sea and Nigeria, where barge rigs are the primary source of drilling and
workover services. Barge rigs are mobile drilling and workover vessels that are built to work in 5 to 25 feet of water. These
barge rigs are towed by tugboats to the drill site with the derrick laid down. The derrick, also known as a mast structure, is a
framework for hoisting and lowering equipment over a borehole. When the barge reaches the drilling location, the hull is
submerged until it rests on the bottom which stabilizes the rig for drilling operations. The derrick is then raised and drilling or
workover operations are conducted with the barge in this position.
U.S. Barge Drilling and Workover
The Company's U.S. market for its barge drilling rigs is the transition zones of the Gulf of Mexico, primarily in Louisiana and, to
a lesser extent, Alabama and Texas, where conventional jackup rigs are unable to operate. This area historically has been the
world's largest market for shallow water barge drilling. The Company has a significant presence in this market, with 22 drilling
and workover barges.
The barge market in the transition zones of the Gulf of Mexico has undergone significant attrition and consolidation in recent
years, with the number of drilling rigs declining from over 120 in the early 1980s to approximately 95 today, and the number of
competitors decreasing over the same period from more than 30 to only two significant contractors. During 1997 and early
1998, drilling and workover activity increased significantly in the Gulf of Mexico transition zones, spurred by the increased use
of 3-D seismic technology, higher natural gas prices, and the settlement of a royalty dispute between the State of Louisiana and
a major oil and gas exploration company. However, conditions in this market softened considerably in mid-1998 through 1999.
Drilling barge utilization began to increase during the second quarter of 2000, and averaged approximately 92% in 2000. By
late 2000, drilling barge dayrates had risen above the levels reached in the 1997-98 period. Utilization and dayrates in the
workover barge market have rebounded, but not to the degree of drilling barges.
3
6
International Barge Drilling
The Company has focused its international barge drilling efforts in the transition zones of West Africa and the Caspian Sea.
International markets have historically been more attractive due to the availability of long-term contracts and the opportunity to
earn dayrates higher than U.S. rates.
The Company is the leading provider of barge rigs in Nigeria, with four of the eight rigs in this market. The Company has
operated in Nigeria since acquiring Mallard in 1996, with Mallard having operated in the country since 1991. The Company's
barge rigs operate under long-term contracts, generally three or more years in duration. Upon expiration, the contracts have
typically been renewed with the then-current operator. The local community problems that plagued the area in late 1999 and
early 2000 abated in the third and fourth quarters of 2000 resulting in utilization at 100 percent in the fourth quarter of 2000.
When operations are suspended, the Company has generally received a standby dayrate from the operator, and in the case of
one barge rig in 2000 that sustained damage, loss-of-hire insurance proceeds.
In 1999, the Company completed modification of a state-of-the-art barge rig for drilling activities in the Caspian Sea. The
barge rig is under contract to a consortium of international operators for a three-year initial term with seven one-year options.
The rig was specially designed with a closed-loop cuttings processing system, high-standard safety systems, and other
specialized functions to withstand the harsh climate conditions of the north Caspian Sea. The rig commenced drilling activities
during September 1999. In 2000, the rig finished work on the first exploration well, the Kashagan East, and moved to the
second well, the Kashagan West.
OFFSHORE OPERATIONS
Jackup Drilling
The Company has seven shallow water jackup rigs that are mobile, self-elevating drilling and workover units equipped with legs
that can be lowered to the ocean floor until a foundation is established to support the hull, which contains the drilling equipment,
jacking system, crew quarters, loading and unloading facilities, storage areas for bulk and liquid materials, helicopter landing
deck and other related equipment. Five of the rigs are cantilever design, a feature that permits the drilling floor to be extended
out from the hull, allowing drilling and workover operations to be performed over existing platforms. Jackup rigs with the
cantilever feature historically have achieved higher dayrates and utilization levels. The other two rigs are slot-type design
configured for the drilling operations to take place through a keyway in the hull. These two rigs have the added capability of
operating in shallow water to a depth less than ten feet. Four of the seven jackup rigs are mat-supported rigs and three are
independent leg rigs.
4
7
Shallow water jackup rig utilization and dayrates in the Gulf of Mexico declined to historically low levels in 1999. In 2000,
however, utilization increased steadily throughout the year as oil and gas operators increased their spending in response to
higher demand for natural gas and higher natural gas prices. Utilization of the Company's jackup rig fleet averaged
approximately 86 percent during 2000. Utilization was affected due to one rig being out of service for six months to undergo
inspection and repairs.
Platform Drilling
The Company's fleet of platform rigs consists of four modular self-erecting rigs. These platform rigs consist of drilling equipment
and machinery arranged in modular packages that are transported to and self-erected on fixed offshore platforms owned by oil
companies. The Company believes that the modular self-erecting design of the platform rigs provides a competitive advantage
due to lower mobilization and erection costs and smaller "footprint."
LAND OPERATIONS
General
The Company's land drilling operations specialize in the drilling of difficult wells, often in remote and harsh environments. Since
beginning operations in 1934, the Company has operated in 53 foreign countries and throughout the United States, making it
one of the most geographically diverse land drilling contractors in the world. In 2000 the Company sold its last U.S. land rig,
thus exiting the U.S. land rig market.
International Operations
The Company's international land drilling operations have focused primarily in Latin America, the Asia Pacific region and the
republics of the former Soviet Union. Because many international drilling locations are inaccessible by traditional land methods
as in jungles, swamps and mountainsides, the Company pioneered the heli-rig concept, whereby a lightweight-design drilling rig
is transported by helicopter or all-terrain vehicle. The Company traditionally has been a pioneer in frontier areas and is currently
working in China, Russia and Kazakhstan.
International utilization is currently lagging the recent increase in U.S. activity. Management is optimistic that the demand for
drilling services in international land markets will rebound as worldwide demand for oil and gas increases and countries
dependent on oil and gas revenues seek to increase their production. The Company has recently entered into several new
contracts and has seen an increase in bid requests that the Company believes will result in increased land rig activity in 2001.
Management is unable to predict the timing or extent that international land drilling markets will rebound. During the year 2000,
the Company's international land rig utilization averaged 35 percent.
5
8
International markets differ from the U.S. market in terms of competition, nature of customers, equipment and experience
requirements. The majority of international drilling markets have the following characteristics: (i) a small number of competitors;
(ii) customers who typically are major, large independent or foreign national oil companies; (iii) drilling programs in remote
locations requiring drilling equipment with a large inventory of spare parts and other ancillary equipment; and (iv) drilling of
difficult wells requiring considerable experience.
Latin America. The Company has 21 land rigs (18 marketed and three cold stacked) located in the Latin American drilling
markets of Colombia, Peru and Bolivia. Most of the Company's rigs have been upgraded to meet the demands of remote and
difficult drilling in these areas.
Asia Pacific/Middle East/Africa. The Company has 18 land rigs (14 marketed and four cold stacked) located in the Asia
Pacific, Middle East and Africa drilling markets. Included are nine helicopter transportable rigs located in this region due to the
remoteness of the mountainside and jungle drilling required to meet customer demand. The Asia Pacific market has been
adversely affected by political and economic instability. The Company experienced weakening demand for its services in certain
Asia Pacific markets in 1998 and 1999, notably Indonesia and Papua New Guinea, and did not recover in 2000.
Former Soviet Union. Eight of the Company's rigs are currently located in the oil and gas producing regions of the former
Soviet Union. After becoming the first Western drilling contractor to enter the Russian drilling market in 1991, few major oil
company projects progressed during the remainder of the 1990's. As a result, in 1999 the Company relocated all four of its
drilling rigs from Russia to Kazakhstan. In 2000, the Company re-entered the Russian market with one rig contracted to work
in the Kharyaga field in Russia on a multi-well contract. In addition, the Company manages one platform rig in the waters off the
coast of Sakhalin Island under a project management contract.
As anticipated, the agreement regarding the pipeline to be built to transport crude oil production from the Tengiz field in
Kazakhstan has increased exploration efforts in this region. In addition to operating the Company's own rigs, the Company was
awarded a five-year alliance contract in 1997 by the operator of the Tengiz field in Kazakhstan to operate and maintain its rigs,
provide expatriate and local drilling crews and manage its warehouse, drilling base and mobile equipment fleet. A recent
amendment to the alliance contract has resulted in the addition of two land rigs which have been substantially modified for
service in the Tengiz field under a five-year contract. The first rig commenced drilling in October 2000, and the second is
anticipated to commence operations in March 2001. By the end of 2001, the Company anticipates operating nine land rigs in
Kazakhstan.
6
9
U.S. Operations
In 1999 the Company sold its 13 remaining U.S. lower-48 land rigs to Unit Corporation for $40.0 million cash plus one million
shares of Unit common stock. In September 2000, the Company sold these shares for net proceeds of $15.0 million. In
November 2000, the Company sold its last U.S. land rig, which had been stacked in Alaska for approximately two years, for
$20.0 million cash.
Specialty Services
Arctic Drilling. The Company has been one of the pioneers in arctic drilling conditions and has developed technology to meet
the demand for increased drilling in an ecologically sensitive manner. Although originally developed for the North Slope of
Alaska, these technological developments and the Company's general expertise in arctic drilling are assets to the Company in
marketing its services to operators in international markets with similar environmental considerations.
Project Management. The Company has been active in managing drilling rigs owned by third parties, generally oil companies,
that prefer to own the rig equipment but do not have the technical expertise or labor resources to operate the rig. During the
year 2000, the Company operated nine project management contracts in six countries.
RENTAL TOOLS
Quail Tools, based in New Iberia, Louisiana, is a provider of premium rental tools used for land and offshore oil and gas drilling
and workover activities. Approximately 65 percent of Quail's equipment is utilized in offshore and coastal water operations.
Since its inception in 1978, Quail's principal customers have been major and independent oil and gas exploration and
production companies.
Quail rents specialized equipment utilized in well drilling, production and workover applications. Quail offers a full line of drill
pipe, drill collars, tubing, high- and low-pressure blowout preventers, choke manifolds, casing scrapers, and junk and cement
mills. During 1997, Quail entered into a contract with a major oil company to be its preferred provider of rental tools to the
land and offshore Texas markets and built a facility in Victoria, Texas, to service this customer and others in the area. In 2000
Quail expanded operations to include a facility in Odessa, Texas. Both Texas locations help Quail to better service the
increasing demand for tools in that region. Approximately 40 percent of Quail's revenues are realized from rentals for workover
activities.
7
10
During the latter part of 1998 and through 1999, rental tool activity in the Gulf of Mexico and Gulf Coast region declined due to
the reduction in oilfield services activity. Rental tool activity has rebounded since mid-1999 with the increase in crude oil and
natural gas prices, and Quail achieved record revenues and cash flow in the year 2000.
Quail derives equipment rental revenues primarily from the daily rental charges for its tools, pipe, and related equipment and, to
a lesser extent, by charging customers for ancillary parts and repairs, transportation of the rental items to the customer's
location, inspection of rental items as specified by the customer, items it sub-rents from other rental tool companies, the
disposal of waste removed from the rental items after their use, and the cost of rental items lost or damaged beyond repair. The
operating costs associated with Quail's rentals consist primarily of expenses associated with depreciation, transportation,
inspection, maintenance, repair and related direct overhead.
COMPETITION
The contract drilling industry is a competitive and cyclical business characterized by high capital and, in recent times, difficulty in
finding and retaining qualified field personnel.
The industry downturn that occurred during the latter half of 1998 and through 1999 increased competition, resulting in lower
dayrates and reduced utilization. In the Gulf of Mexico barge drilling and workover markets the Company competes with only
one major competitor, R & B Falcon, now Transocean Sedco Forex. In the jackup market, there are numerous U.S. offshore
contractors. In international land markets, the Company competes with a number of international drilling contractors but also
with smaller local contractors in certain markets. However, due to the high capital costs of operating in international land
markets as compared to the U.S. land market, the high cost of mobilizing land rigs from one country to another, and the
technical expertise required, there are usually fewer competitors in international land markets. In international land and offshore
markets, experience in operating in certain environments and customer alliances have been factors in the selection of the
Company in certain cases, as well as the Company's patented drilling equipment for remote drilling projects. The Company
believes that the market for drilling contracts, both land and offshore, will continue to be competitive for the foreseeable future.
Certain of the Company's competitors have greater financial resources than the Company, which may enable them to better
withstand industry downturns, compete more effectively on the basis of price, build new rigs or acquire existing rigs.
Management believes that Quail is one of the leading rental tool companies in the offshore Gulf of Mexico. A number of Quail's
competitors in the Gulf of Mexico and the Gulf Coast land markets are substantially larger and have greater financial resources
than Quail.
CUSTOMERS
The Company believes it has developed an international reputation for providing efficient, safe, environmentally conscious and
innovative drilling services. An increasing trend indicates that a number of the Company's customers have been seeking to
establish exploration or development drilling programs based on partnering relationships or
8
11
alliances with a limited number of preferred drilling contractors. Such relationships or alliances can result in longer-term work
and higher efficiencies that increase profitability for drilling contractors at a lower overall well cost for oil and gas operators. The
Company is currently a preferred contractor for operators in certain U.S. and international locations, which management
believes is a result of the Company's quality of equipment, personnel, service and experience.
The Company's drilling customer base consists of major, independent and foreign-owned oil and gas companies. Shell
Petroleum Development Company of Nigeria, the Company's largest customer for 2000 and 1999, accounted for
approximately 10 percent of total revenues in both years. For fiscal year 1998, Chevron was the Company's largest customer
with approximately 15 percent of total revenues.
CONTRACTS
The Company generally obtains drilling contracts through competitive bidding. Under most contracts the Company is paid a
daily fee, or dayrate. The dayrate received is based on several factors, including: type of equipment, services and personnel
furnished; investment required to perform the contract; location of the well; term of the contract; and competitive market forces.
The Company generally receives a lump sum fee to move its equipment to the drilling site, which in most cases approximates
the cost incurred by the Company. U.S. contracts are generally for one to three wells with options, while international contracts
are more likely to be for multi-well long-term programs. The Company provides project management services including
logistics, procurement, well design, engineering, site preparation and road construction in an effort to help customers eliminate
or reduce management overhead, which would otherwise be necessary to supervise such services.
EMPLOYEES
At December 31, 2000, the Company employed 3,542 persons, increasing approximately 13 percent from the 3,142
employed at December 31, 1999. The following table sets forth the composition of the Company's employees:
December 31,
------------------
2000 1999
---- ----
International Drilling Operations 2,109 1,768
U.S. Drilling Operations 1,175 1,112
Rental Tool Operations 107 89
Corporate and Other 151 173
9
12
RISKS AND ENVIRONMENTAL CONSIDERATIONS
The operations of the Company are subject to numerous federal, state and local laws and regulations governing the discharge of
materials into the environment or otherwise relating to environmental protection. Numerous governmental agencies, such as the
U.S. Environmental Protection Agency ("EPA"), issue regulations to implement and enforce such laws, which often require
difficult and costly compliance measures that carry substantial administrative, civil and criminal penalties or may result in
injunctive relief for failure to comply. These laws and regulations may require the acquisition of a permit before drilling
commences, restrict the types, quantities and concentrations of various substances that can be released into the environment in
connection with drilling and production activities, limit or prohibit construction or drilling activities on certain lands lying within
wilderness, wetlands, ecologically sensitive and other protected areas, require remedial action to prevent pollution from former
operations, and impose substantial liabilities for pollution resulting from the Company's operations. Changes in environmental
laws and regulations occur frequently, and any changes that result in more stringent and costly compliance could adversely
affect the Company's operations and financial position, as well as those of similarly situated entities operating in the Gulf Coast
market. While management believes that the Company is in substantial compliance with current applicable environmental laws
and regulations, there is no assurance that compliance can be maintained in the future.
The drilling of oil and gas wells is subject to various federal, state, local and foreign laws, rules and regulations. The Company,
as an owner or operator of both onshore and offshore facilities including mobile offshore drilling rigs in or near waters of the
United States, may be liable for the costs of removal and damages arising out of a pollution incident to the extent set forth in the
Federal Water Pollution Control Act, as amended by the Oil Pollution Act of 1990 ("OPA"), the Outer Continental Shelf
Lands Act ("OCSLA"), the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), and the
Resource Conservation and Recovery Act ("RCRA"), each as amended from time to time. In addition, the Company may also
be subject to applicable state law and other civil claims arising out of any such incident.
The OPA and regulations promulgated pursuant thereto impose a variety of regulations on "responsible parties" related to the
prevention of oil spills and liability for damages resulting from such spills. A "responsible party" includes the owner or operator
of a vessel, pipeline or onshore facility, or the lessee or permittee of the area in which an offshore facility is located. The OPA
assigns liability of oil removal costs and a variety of public and private damages to each responsible party.
The liability for a mobile offshore drilling rig is determined by whether the unit is functioning as a vessel or is in place and
functioning as an offshore facility. If operating as a vessel, liability limits of $600 per gross ton or $500,000, whichever is
greater, apply. If functioning as an offshore facility, the mobile offshore drilling rig is considered a "tank vessel" for spills of oil on
or above the water surface, with liability limits of $1,200 per gross ton or $10.0 million. To the extent damages and removal
costs exceed this amount, the mobile
10
13
offshore drilling rig will be treated as an offshore facility and the offshore lessee will be responsible up to higher liability limits for
all removal costs plus $75.0 million. A party cannot take advantage of liability limits if the spill was caused by gross negligence
or willful misconduct or resulted from violation of a federal safety, construction or operating regulation. If the party fails to
report a spill or to cooperate fully in the cleanup, liability limits likewise do not apply. Few defenses exist to the liability imposed
by the OPA. The OPA also imposes ongoing requirements on a responsible party, including proof of financial responsibility (to
cover at least some costs in a potential spill) and preparation of an oil spill contingency plan for offshore facilities and vessels in
excess of 300 gross tons. Amendments to the OPA adopted in 1996 require owners and operators of offshore facilities that
have a worst case oil spill potential of more than 1,000 barrels to demonstrate financial responsibility in amounts ranging from
$10.0 million in specified state waters to $35.0 million in federal Outer Continental Shelf waters, with higher amounts, up to
$150.0 million, in certain limited circumstances where the U.S. Minerals Management Service ("MMS") believes such a level is
justified by the risks posed by the quantity or quality of oil that is handled by the facility. However, such OPA amendments did
not reduce the amount of financial responsibility required for "tank vessels." Since the Company's offshore drilling rigs are
typically classified as tank vessels, the recent amendments to the OPA are not expected to have a significant effect on the
Company's operations. A failure to comply with ongoing requirements or inadequate cooperation in a spill may even subject a
responsible party to civil or criminal enforcement actions.
In addition, the OCSLA authorizes regulations relating to safety and environmental protection applicable to lessees and
permittees operating on the Outer Continental Shelf. Specific design and operational standards may apply to Outer Continental
Shelf vessels, rigs, platforms, vehicles and structures. Violations of environmental-related lease conditions or regulations issued
pursuant to the OCSLA can result in substantial civil and criminal penalties as well as potential court injunctions curtailing
operations and the cancellation of leases. Such enforcement liabilities can result from either governmental or citizen prosecution.
All of the Company's operating U.S. barge drilling rigs have zero discharge capabilities as required by law. In addition, in
recognition of environmental concerns regarding dredging of inland waters and permitting requirements, the Company conducts
negligible dredging operations, with approximately two-thirds of the Company's offshore drilling contracts involving directional
drilling, which minimizes the need for dredging. However, the existence of such laws and regulations has had and will continue
to have a restrictive effect on the Company and its customers.
CERCLA, also known as "Superfund," and comparable state laws impose liability without regard to fault or the legality of the
original conduct, on certain classes of persons who are considered to be responsible for the release of a "hazardous substance"
into the environment. While CERCLA exempts crude oil from the definition of hazardous substances for purposes of the
statute, the Company's operations may involve the use or handling of other materials that may be classified as hazardous
substances. CERCLA
11
14
assigns strict liability to each responsible party for all response and remediation costs, as well as natural resource damages. Few
defenses exist to the liability imposed by CERCLA. The Company believes that it is in compliance with CERCLA and currently
is not aware of any events that, if brought to the attention of regulatory authorities, would lead to the imposition of CERCLA
liability against the Company.
RCRA generally does not regulate most wastes generated by the exploration and production of oil and gas. RCRA specifically
excludes from the definition of hazardous waste "drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas or geothermal energy." However, these wastes may be
regulated by EPA or state agencies as solid waste. Moreover, ordinary industrial wastes, such as paint wastes, waste solvents,
laboratory wastes, and waste oils, may be regulated as hazardous waste. Although the costs of managing solid and hazardous
wastes may be significant, the Company does not expect to experience more burdensome costs than similarly situated
companies involved in drilling operations in the Gulf Coast market.
The drilling industry is dependent on the demand for services from the oil and gas exploration and development industry and,
accordingly, is affected by changes in laws relating to the energy business. The Company's business is affected generally by
political developments and by federal, state, local and foreign laws and regulations that may relate directly to the oil and gas
industry. The adoption of laws and regulations, both U.S. and foreign, that curtail exploration and development drilling for oil
and gas for economic, environmental and other policy reasons may adversely affect the Company's operations by limiting
available drilling opportunities.
12
15
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company operates in three segments, U.S. drilling services, international drilling services and rental tool operations.
Information about the Company's business segments and operations by geographic areas for the years ended December 31,
2000 and 1999, the four months ended December 31, 1998 and the year ended August 31, 1998, is set forth in Note 10 of
Notes to Consolidated Financial Statements.
Item 2. PROPERTIES
The Company owns and occupies a ten-story building in downtown Tulsa, Oklahoma, as its home office. Additionally, the
Company owns and leases office space and operating facilities in various locations, but only to the extent necessary for
administrative and operational support functions.
Land Rigs. The following table shows, as of December 31, 2000, the locations and drilling depth ratings of the Company's 40
actively marketed land rigs:
Actively Marketed Land Rigs
Drilling Depth Rating in Feet
10,000
or Over
less 15,000 20,000 25,000 25,000 TOTAL
------ ------ ------ ------ ------ ------
INTERNATIONAL:
Latin America -- 6 5 4 3 18
Asia Pacific 1 3 4 1 1 10
Africa and Middle East 1 2 1 -- -- 4
Former Soviet Union 1 3 1 -- 3 8
--- --- --- --- --- ---
Total 3 14 11 5 7 40
--- --- --- --- --- ---
13
16
In addition, the Company has seven land rigs classified as cold stacked which would need to be refurbished at a significant cost
before being placed back into service, with locations and drilling depth ratings as follows:
Cold Stacked Land Rigs
Drilling Depth Rating in Feet
10,000
or Over
less 15,000 20,000 25,000 25,000 TOTAL
------ ------ ------ ------ ------ ------
INTERNATIONAL:
Latin America -- 1 2 -- -- 3
Asia Pacific 3 1 -- -- -- 4
Africa and Middle East -- -- -- -- -- --
Former Soviet Union -- -- -- -- -- --
--- --- --- --- --- ---
Total 3 2 2 -- -- 7
--- --- --- --- --- ---
Barge Rigs. A schedule of the Company's deep and intermediate drilling barges located in the Gulf of Mexico, as of December
31, 2000, is set forth below:
Maximum
Year Built Drilling
or Last Depth
Horsepower Refurbished (Feet) Status(1)
---------- ----------- -------- ---------
Deep Drilling:
Rig No. 50 2,000 1993 25,000 Active
Rig No. 51 2,000 1993 25,000 Active
Rig No. 53 1,600 1995 20,000 Active
Rig No. 54 2,000 1995 25,000 Active
Rig No. 55 2,000 1993 25,000 Active
Rig No. 56 2,000 1992 25,000 Active
Rig No. 57 1,500 1997 20,000 Active
Rig No. 76 3,000 1997 30,000 Active
Intermediate Drilling:
Rig No. 8 1,000 1995 14,000 Active
Rig No. 12 1,100 1990 14,000 Active
Rig No. 15 1,000 1998 15,000 Active
Rig No. 17 1,000 1993 13,000 Active
Rig No. 21 1,200 1995 13,000 Active
(1) "Active" denotes that the rig is currently under contract or available for contract.
14
17
A schedule of the Company's workover rigs, as of December 31, 2000, which includes some rigs with shallow drilling
capabilities, is set forth below:
Maximum
Year Built Drilling
or Last Depth
Horsepower Refurbished (Feet) Status(1)
---------- ----------- -------- ---------
Workover and Shallow Drilling:
Rig No. 6(2) 700 1995 -- Active
Rig No. 9(2) 650 1996 -- Active
Rig No. 16 800 1994 8,500 Active
Rig No. 18 800 1993 8,500 Active
Rig No. 20 800 1995 8,500 Active
Rig No. 23 1,000 1993 11,500 Active
Rig No. 24 1,000 1992 11,500 Active
Rig No. 25 1,000 1993 11,500 Active
Rig No. 26(2) 650 1996 -- Active
(1) "Active" denotes that the rig is currently under contract or available for contract.
(2) Workover rig.
15
18
A schedule of the Company's international drilling barges, as of December 31, 2000, is set forth below:
Maximum
Year Built Drilling
or Last Depth
Horsepower Refurbished (Feet) Status(1)
---------- ----------- -------- ---------
Deep Drilling:
Rig No. 72 3,000 1991 30,000 Active
Rig No. 73 3,000 2000 30,000 Active
Rig No. 74 3,000 1997 30,000 Active
Rig No. 75 3,000 1999 30,000 Active
Rig No. 257 3,000 1999 25,000 Active
(1) "Active" denotes that the rig is currently under contract or available for contract.
Platform Rigs. The following table sets forth certain information, as of December 31, 2000, with respect to the Company's
platform rigs:
Maximum
Year Built Drilling
or Last Depth
Horsepower Refurbished (Feet) Status(1)
---------- ----------- -------- ---------
Deep Drilling:
Rig No. 2 1,000 1982 12,000 Active
Rig No. 3 1,000 1997 12,000 Active
Rig No. 10(2) 650 1989 -- Active
Rig No. 41 1,000 1997 12,500 Active
(1) "Active" denotes that the rig is currently under contract or available for contract.
(2) Workover rig.
16
19
Jackup Rigs. The following table sets forth certain information as of December 31, 2000, with respect to the Company's
jackup rigs:
Maximum Maximum
Water Drilling
Depth Depth
Design (1) (Feet) (Feet) Status(2)
---------------------------- ------- -------- ---------
Rig No. 11(3) Bethlehem JU-200(MC) 200 -- Active
Rig No. 14 Baker Marine Big Foot(IS) 85 20,000 Active
Rig No. 15 Baker Marine Big Foot III(IS) 100 20,000 Active
Rig No. 20 Bethlehem JU-100(MC) 110 25,000 Active
Rig No. 21 Baker Marine BMC-125(MC) 100 20,000 Active
Rig No. 22 Le Tourneau Class 51(MC) 173 15,000 Active
Rig No. 25 Le Tourneau Class 150-44(IC) 215 20,000 Active
(1) IC--independent leg, cantilevered; IS--independent leg, slot; MC--mat-supported, cantilevered.
(2) "Active" denotes that the rig is currently under contract or available for contract.
(3) Workover rig.
17
20
The following table presents the Company's utilization rates, rigs available for service and cold stacked rigs for the years ended
December 31, 2000 and 1999.
2000 1999
------ ------
Transition Zone Rig Data:
U.S. barge deep drilling:
Rigs available for service (1) 8.0 7.5
Utilization rate of rigs available for service (2) 92% 78%
U.S. barge intermediate drilling:
Rigs available for service (1) 5.0 5.0
Utilization rate of rigs available for service (2) 93% 59%
U.S. barge workover and shallow drilling:
Rigs available for service (1) 9.0 9.0
Utilization rate of rigs available for service (2) 44% 31%
Cold stacked rigs (1) 0 1.0
International barge drilling:
Rigs available for service (1) 5.0 4.4
Utilization rate of rigs available for service (2) 97% 96%
Offshore Rig Data:
Jackup Rigs:
Rigs available for service (1) 7.0 7.0
Utilization rate of rigs available for service (2) 86% 66%
Platform Rigs:
Rigs available for service (1) 4.0 4.5
Utilization rate of rigs available for service (2) 53% 56%
Cold stacked rigs (1) 0 1.0
18
21
2000 1999
------ ------
Land Rig Data:
International Rigs:
Rigs available for service(1) 40.0 45.2
Utilization rate of rigs available for service(2) 35% 36%
Cold stacked rigs(1) 7.0 8.0
U.S. Rigs(3):
Rigs available for service(1) .9 11.0
Utilization rate of rigs available for service(2) 0% 40%
(1) The number of rigs is determined by calculating the number of days each rig was in the fleet, e.g., a rig under contract or
available for contract for an entire year is 1.0 "rigs available for service" and a rig cold stacked for one quarter is 0.25 "cold
stacked rigs." "Rigs available for service" includes rigs currently under contract or available for contract. "Cold stacked rigs"
includes all rigs that are stacked and would require significant refurbishment cost before being placed back into service.
(2) Rig utilization rates are based on a weighted average basis assuming 365 days availability for all rigs available for service.
Rigs acquired or disposed of have been treated as added to or removed from the rig fleet as of the date of acquisition or
disposal. Rigs that are in operation or fully or partially staffed and on a revenue-producing standby status are considered to be
utilized. Rigs under contract that generate revenues during moves between locations or during mobilization/demobilization are
also considered to be utilized.
(3) Includes 13 U.S. lower-48 land rigs through the date of sale, September 30, 1999, and one U.S. land rig located in Alaska,
which was sold November 20, 2000.
Item 3. LEGAL PROCEEDINGS
The Company is a party to certain legal proceedings that have resulted from the ordinary conduct of its business. In the opinion
of the Company's management, none of these proceedings is expected to have a material adverse effect on the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to Parker Drilling Company security holders during the fourth quarter of 2000.
19
22
Item 4A. EXECUTIVE OFFICERS
Officers are elected each year by the board of directors following the annual meeting for a term of one year and until the
election and qualification of their successors. The current executive officers of the Company and their ages, positions with the
Company and business experience are presented below:
(1) Robert L. Parker, 77, chairman, joined the Company in 1944 and was elected vice president in 1950. He was elected
president in 1954 and chief executive officer and chairman in 1969.
(2) Robert L. Parker Jr., 52, president and chief executive officer, joined the Company in 1973 as a contract representative
and was named manager of U.S. operations later in 1973. He was elected a vice president in 1973, executive vice president in
1976 and was named president and chief operating officer in October 1977. In December 1991, he was elected chief
executive officer.
(3) James W. Linn, 55, executive vice president and chief operating officer, joined the Company in 1973. He has general
charge of the Company's business affairs and its officers. Mr. Linn first served in the Company's international division and in
1976 was named northern U.S. district manager prior to being elected vice president of U.S. and Canada operations in 1979.
He was named a senior vice president in September 1981 and was elected to his current position in December 1991.
(4) James J. Davis, 54, senior vice president of finance and chief financial officer, joined the Company in November 1991.
From 1986 through 1991, Mr. Davis was vice president and treasurer of MAPCO Inc., a diversified energy company with
interests in natural gas liquids marketing and transportation, oil refining and retail motor fuel marketing. He serves as a member
of the board of directors of Dollar Thrifty Funding Corp.
(5) Thomas L. Wingerter, 48, vice president of operations, joined the Company in 1979. In 1983 he was named contract
manager for the Rocky Mountain division. He was promoted to Rocky Mountain division manager in 1984, a position he held
until September 1991 when he was elected vice president, North American region. In March 1999 he was appointed vice
president and general manager - North American operations. In January 2001, he was appointed to his current position.
20
23
Item 4A. EXECUTIVE OFFICERS (continued)
(6) W. Kirk Brassfield, 45, corporate controller and chief accounting officer, joined the Company in March 1998 in his stated
position. From 1991 through March 1998, Mr. Brassfield served in various positions, including subsidiary controller and
director of financial planning of MAPCO Inc., a diversified energy company. From 1979 through 1991, Mr. Brassfield served
at the public accounting firm, KPMG Peat Marwick.
OTHER PARKER DRILLING COMPANY OFFICERS
(7) John R. Gass, 49, vice president of corporate business development, joined the Company in 1977 and has served in
various management positions in the Company's international divisions. In 1985 he became the division manager of Africa and
the Middle East. In 1987 he directed the Company's mining operations in South Africa. In 1989 he was promoted to
international contract manager. In January 1996, he was elected vice president, frontier areas and assumed his current position
in March 1999.
(8) Denis Graham, 51, vice president of engineering, joined the Company in 2000. Mr. Graham was the senior vice president
of technical services for Diamond Offshore Inc., an international offshore drilling contractor. His experience with Diamond
Offshore ranged from 1978 through 1999 in the areas of offshore drilling rig design, new construction, conversions, marine
operations, maintenance and regulatory compliance.
(9) Patrick Seals, 37, vice president of shared services, joined the Company in 1992 as an internal auditor. From 1993 through
1999, he held various contracts and marketing management roles in the North American Division. In late 1999, Mr. Seals
assumed the role of general manager of e-business and in January of 2001 was promoted to his current position. From 1985 to
1992, he served in roles at the public accounting firm of Arthur Andersen, Scrivner, Inc. and The Oklahoma Publishing
Company.
(10) David W. Tucker, 45, was elected treasurer in March 1999. He joined the Company in 1978 as a financial analyst and
served in various financial and accounting positions before being named chief financial officer of the Company's wholly-owned
subsidiary, Hercules Offshore Corporation, in February 1998.
21
24
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Parker Drilling Company common stock is listed for trading on the New York Stock Exchange under the symbol PKD. At the
close of business on December 31, 2000, there were 3,155 holders of record of Parker Drilling common stock. Prices on
Parker Drilling's common stock for the years ended December 31, 2000 and 1999, were as follows:
2000 1999
------------------------------ -------------------------------
Quarter High Low High Low
------- ---------- ---------- --------- ----------
First $ 5.125 $ 3.000 $ 4.688 $ 2.250
Second 6.875 3.750 4.375 3.000
Third 7.438 4.875 5.625 3.312
Fourth 7.125 3.938 4.750 3.000
No dividends have been paid on common stock since February 1987. Restrictions contained in Parker Drilling's existing bank
revolving loan facility prohibit the payment of dividends and the indenture for the Senior Notes restricts the payment of
dividends. The Company has no present intention to pay dividends on its common stock in the foreseeable future because of
the restrictions noted and because of its business plan to reinvest earnings in the Company's operations.
22
25
Item 6. SELECTED FINANCIAL DATA
(In Thousands Except Per Share Data)
Four Months
Year Ended Year Ended Ended Year Ended
December 31, December 31, December 31, August 31,
2000 1999 1998 1998
Revenues $ 376,349 $ 324,553 $ 136,723 $ 481,223
Net income (loss) $ (19,045)(1) $ (37,897) $ (14,633) $ 28,092
Earnings (loss) per
share, diluted $ (.23)(1) $ (.49) $ (.19) $ .36
Total assets $ 1,107,419 $ 1,082,743 $ 1,159,326 $ 1,200,544
Long-term debt $ 592,584 $ 648,577 $ 630,479 $ 630,090
(1) Income (loss) before extraordinary gain was $(22,981) or $(.28) per share.
(In Thousands Except Per Share Data)
Year Ended Year Ended
August 31, August 31,
1997 1996
Revenues $ 311,644 $ 156,652
Net income (loss) $ 16,315 $ 4,053
Earnings (loss) per
share, diluted $ .23 $ .07
Total assets $ 984,136 $ 275,959
Long-term debt $ 551,042 $ 2,794
23
26
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Introduction
The year 2000 was marked by a significant improvement in rig activity and cash flow for the Company. Rig utilization and
dayrates improved substantially in the Company's Gulf of Mexico drilling markets, as a result of the increase in spending by oil
and gas operators in response to significantly higher oil and gas prices and an increase in demand for natural gas in the U.S. In
addition, rental tool activity increased substantially for Quail. While the Company reported a loss for the year 2000, operating
results were substantially improved over the prior year, and the Company's financial position and prospects going forward have
improved. Management is unable to predict the duration of present market conditions, but based on a continuation of current
high commodity prices and spending by oil and gas operators, particularly in the Company's Gulf of Mexico markets,
management is encouraged about prospects for the year 2001.
The Company recently announced the relocation of its corporate office to Houston, Texas, which is expected to be completed
during the third quarter of 2001. The relocation will be accompanied by a reorganization of certain senior management positions
and of the management of drilling operations. Management believes that the Company will benefit from being closer to certain
customers, competitors and vendors. In addition, management anticipates the long-term savings from the consolidation of
offices and other administrative cost-cutting steps will offset the moving expenses for retained employees and severance costs
for terminated employees.
During the second quarter of 1999, the Company reorganized its drilling operations and administrative functions to enable more
efficient management and administration of worldwide operations and to reduce operating and overhead costs. Prior to the
reorganization, the Company's business segments were designated as land drilling, offshore drilling and rental tools. Mallard and
Hercules made up the offshore drilling segment and since the time of their acquisitions, each company maintained its existing
organization structure, both operationally and administratively. The reorganization in 1999 resulted in the consolidation of the
land and offshore drilling operations into two new segments, U.S. drilling operations and international drilling operations.
Certain accounting and other administrative functions previously performed by Mallard and Hercules were consolidated into
corporate. Quail was not significantly affected by the reorganization. Results of operations for fiscal year ended 1998 have been
reclassified to reflect the new organization.
During 1998 the Company decided to change its fiscal year end from August 31 to December 31 effective for the calendar
year beginning January 1, 1999.
24
27
RESULTS OF OPERATIONS (continued)
Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
The Company recorded a net loss of $23.0 million, before extraordinary gain, for the year ended December 31, 2000,
compared to a net loss of $37.9 million recorded for the year ended December 31, 1999.
The Company's revenues increased $51.8 million to $376.3 million in the current year as compared to 1999. U.S. drilling
revenues increased $34.7 million to $148.4 million. U.S. offshore drilling revenues increased $50.8 million due primarily to
increased utilization and dayrates for the drilling barge rigs and the jackup rigs. U.S. land drilling revenues decreased $16.1
million due to the sale of the Company's 13 U.S. land rigs on September 30, 1999 and the sale of Rig 245, located in Alaska,
in November 2000. Rig 245 was stacked throughout the current year.
International drilling revenues increased $2.2 million to $185.1 million in the current period as compared to the year ended
December 31, 1999.
International land drilling revenues decreased $14.5 million while international offshore drilling revenues increased $16.7 million.
Primarily responsible for the international land drilling revenues decrease was the Latin America region, which decreased $15.9
million. This decrease is attributed to reduced rig utilization in Colombia, Ecuador and Peru. Revenues from the Bolivian
operations were relatively constant for the two periods but have recently decreased. In addition, land drilling revenues
decreased $9.7 million in the Asia Pacific region due to completion of a one-well drilling contract in Vietnam, that ended during
the third quarter of 1999, and reduced utilization in Papua New Guinea. Revenues in the Frontier region, which includes Russia,
Kazakhstan, Africa and the Middle East, increased $11.1 million during the current period as compared to the year ended
December 31, 1999. This increase is primarily attributed to short-term drilling contracts conducted during the current year in
Madagascar and Nigeria (land contract). Additionally, a labor contract in Kuwait and increased rig utilization in Kazakhstan
contributed to the increase.
25
28
RESULTS OF OPERATIONS (continued)
International offshore drilling revenues increased $16.7 million to $72.2 million due primarily to barge Rig 257 in the Caspian
Sea and barge Rig 75 in Nigeria. Barge Rig 257, which commenced drilling in September of 1999, contributed $24.8 million of
revenues during the year ended December 31, 2000, an increase of $16.2 million. With the addition of barge Rig 75 during the
third quarter of 1999, the Company has four barge rigs in the Nigerian offshore market. Due to several episodes of community
unrest, three of the four barge rigs were on standby status during most of the first six months of the current year. One rig, barge
Rig 74, operated for approximately three and a half months during the first six months. Despite the reduced revenues earned
while on standby, Nigerian offshore revenues increased $11.3 million to $47.4 million during the current year. The increase is
due to revenues earned by the new barge Rig 75 and the start-up of drilling operations on Rig 74 which was on standby during
1999. Since August 2000, drilling operations on the Nigerian barge rigs have resumed at full dayrates. Offsetting the increased
revenues in the Caspian Sea and Nigeria was a $10.8 million decrease in international offshore revenues due to the completion
of a barge contract in Venezuela during the third quarter of 1999.
Rental tool revenues increased $15.2 million due to the increased level of drilling activity in the Gulf of Mexico. Contributing to
this increase was the New Iberia, Louisiana, operation in the amount of $7.7 million, $5.0 million from the Victoria, Texas,
operation and $2.5 million from the new Odessa, Texas, operation which commenced operations in May 2000.
Profit margins (revenues less direct operating expenses, excluding depreciation) of $128.3 million in the current period reflect
an increase of $43.0 million from the $85.3 million recorded during the year ended December 31, 1999. The U.S. and
international drilling segments recorded profit margin percentages (profit margin as a percent of revenues) of 33.2 percent and
28.2 percent, respectively, in the current year, as compared to 11.9 percent and 31.0 percent in 1999. U.S. profit margins
increased $35.7 million. U.S. drilling profit margins were positively impacted during the current year by increased utilization in
the Gulf of Mexico from the barge and jackup rigs. In addition, average dayrates for the jackup rigs increased approximately
45 percent during the current period when compared to the prior year. Offsetting the increased U.S. offshore profit margins
was the sale of all 13 U.S. lower-48 land rigs during the third quarter of 1999. During the year ended December 31, 1999, the
U.S. lower-48 land rigs contributed profit margins of $1.7 million. In addition, Rig 245, which was stacked in Alaska all year,
was sold in November of 2000.
26
29
RESULTS OF OPERATIONS (continued)
International drilling profit margins declined $4.5 million to $52.2 million during the year ended December 31, 2000 as
compared to 1999. International land drilling profit margins declined $5.9 million to $29.5 million during the current period
primarily due to lower utilization in the Company's land drilling operations as previously discussed. The international offshore
drilling profit margins increased $1.4 million to $22.7 million.
Rental tool profit margins increased $10.1 million to $26.8 million during the current year as compared to the year ended
December 31, 1999. Profit margins increased primarily due to the $15.2 million increase in revenue during the current year.
The profit margin percentage increased during the current period to 62.7 percent from 60.6 percent for the previous year.
Depreciation and amortization expense increased $2.9 million to $85.1 million in the current year. Depreciation expense
recorded in connection with 1998/1999 capital additions, principally barge Rig 257 and barge Rig 75, was the primary reason
for the increase. General and administrative expenses increased $4.1 million in the current year as compared to 1999. This
increase is primarily attributed to travel costs, employee bonuses, franchise taxes, professional fees and information technology
projects.
Interest expense increased $1.1 million due to $3.0 million of interest being capitalized to construction projects during the year
ended December 31, 1999, as compared to $0.5 million capitalized during the current year. Gain on disposition of assets
decreased $21.2 million to $17.9 million for the current year. On September 30, 1999 the Company sold its U.S. lower-48
land rigs to Unit Corporation for $40.0 million cash plus one million shares of Unit Corporation common stock. The Company
recognized a pre-tax gain of $36.1 million during the third quarter of 1999. In September 2000, the Company sold its one
million shares of Unit Corporation common stock and recognized a pre-tax gain of $7.4 million. In November 2000, the
Company sold Rig 245 in Alaska for $20.0 million and recognized a pre-tax gain of $14.9 million.
27
30
RESULTS OF OPERATIONS (continued)
Income tax expense consists of foreign tax expense and deferred tax benefit. The deferred tax benefit is due to the loss incurred
during the year ended December 31, 2000.
Year Ended December 31, 1999 Compared to Fiscal Year Ended August 31, 1998
The Company's net loss of $37.9 million in 1999 reflects a decrease of $66.0 million when compared to the net income of
$28.1 million recorded in fiscal 1998. The loss in 1999 is reflective of the significant decline in utilization and dayrates that
began in the fourth quarter of fiscal 1998 and continued throughout 1999.
The Company's revenues decreased $156.7 million to $324.6 million as all of the Company's market segments, U.S.,
international and rental tools, recorded a decrease in revenues. International drilling revenues decreased $66.6 million to
$182.9 million for the year ended December 31, 1999, as compared to the fiscal year ended August 31, 1998. International
land revenues were negatively impacted during 1999 by the downturn in the industry and as a result, land revenues decreased
$88.1 million to $127.5 million. This decrease is primarily attributed to the significant reduction in utilization across essentially all
international land rig markets. During the first and second quarters of fiscal 1998, international land rig utilization averaged 81
percent as compared to 28 percent during the fourth quarter of 1999. The average dayrates also decreased for comparable
periods but only by approximately 7 percent. Land drilling revenues decreased in all countries in which the Company operated
except Ecuador (increased $7.7 million), Vietnam (increased $4.4 million) and Kazakhstan/Russia (increased $7.5 million).
Ecuador and Vietnam represented one-rig contracts that began toward the end or after fiscal year 1998. The geographic areas
most impacted by the industry downturn during 1999 were Indonesia, Papua New Guinea and Bolivia.
28
31
RESULTS OF OPERATIONS 1999 AS COMPARED TO 1998 (continued)
International offshore revenues increased $21.5 million to $55.5 million in September 1999 as compared to fiscal year 1998.
The increase is primarily attributable to two new barge rigs, one each in Nigeria and the Caspian Sea. Rig 257 in the Caspian
Sea began drilling in September and Rig 75 in Nigeria generated standby revenues pending commencement of drilling
operations. In addition, barge Rig 76 completed drilling operations in Venezuela, generating approximately $10.8 million in
revenues during 1999.
U.S. drilling revenues decreased $83.4 million to $113.7 million during 1999 as compared to fiscal 1998. U.S. land drilling
revenues, arising from the Company's 13 U.S. lower-48 land rigs and one rig in Alaska, decreased $32.9 million during 1999.
On September 30, 1999 the Company sold the 13 lower-48 land rigs to Unit Corporation for $40.0 million in cash and one
million shares of Unit common stock. A pre-tax gain of $36.1 million was recognized during the third quarter. The one
remaining U.S. land rig, located in Alaska, was stacked since March 1999 due to reduced drilling activity in Alaska.
U.S. offshore revenues, arising from the Company's fleet of barge, platform and jackup rigs located in the Gulf of Mexico,
decreased $50.5 million during 1999 as compared to fiscal 1998. Rig utilization and dayrates in the Gulf of Mexico offshore
drilling market were particularly hurt by the decline in oil and gas operators' spending. Barge drilling and workover rig revenues
decreased $32.6 million during 1999 due to approximately a 25 percent decrease in dayrates and a decrease in barge rig
utilization from an average 90 percent in fiscal 1998 to approximately 45 percent in 1999. Revenues related to the seven
jackups decreased $10.5 million during 1999 as compared to the eight months of operations (Hercules was acquired
December 30, 1997) during fiscal 1998. Jackup dayrates were particularly impacted by the downturn, declining from an
average $28,000 per day in fiscal 1998 to approximately $16,000 per day during 1999. Platform rig revenues decreased $7.4
million due to decreases in dayrates and utilization. In addition, one platform rig which had operated in the Gulf of Mexico was
sold during 1999.
The Company's rental tool revenues decreased $5.1 million to $27.7 million during 1999 as compared to fiscal 1998. Rental
tool revenues were impacted during 1999 mainly due to depressed drilling activity in the Gulf of Mexico.
Profit margins (revenues less direct operating expenses) of $85.3 million in 1999 reflected a decrease of $84.2 million from the
$169.5 million recorded in fiscal 1998. The U.S. and international drilling segments recorded profit margin percentages (profit
margin as a percent of revenues) of 12 percent and 31 percent in 1999, as compared to 35 percent and 33 percent in fiscal
1998. The significant reduction in utilization and drilling dayrates during 1999 accounted for the significant declines in profit
margin percentages. The Company's rental tool business had a slight increase in profit margin percentage to 61 percent from 58
percent.
29
32
RESULTS OF OPERATIONS 1999 AS COMPARED TO 1998 (continued)
Depreciation and amortization increased $13.6 million to $82.2 million in 1999 as compared to fiscal 1998. This increase was
primarily attributable to two major construction projects, Rig 257 and Rig 75, that completed construction and began
depreciating during the third quarter of 1999. In addition, 1999 recognized a full year of depreciation expense on the assets of
Hercules and a full year of amortization of goodwill associated with the purchase compared to only eight months depreciation
and amortization in fiscal 1998. General and administrative expense increased $2.0 million, due primarily to severance costs
incurred as part of management's restructuring of operations in early 1999 referred to previously.
Interest expense increased $6.5 million to $55.9 million during 1999. Subsequent to fiscal 1998, the Company borrowed an
additional $20.0 million on its revolving credit facility that remained outstanding until September 30, 1999 when the outstanding
balance of $40.0 million was repaid in full and the revolving credit facility was terminated. The revolving credit facility was
repaid with the proceeds from the sale of the 13 lower-48 land rigs. In October 1999, the Company entered into a new $50.0
million revolving credit facility and refinanced $24.8 million of the capital cost to construct Rig 75. These financing arrangements
resulted in higher average outstanding debt levels in 1999 than in fiscal 1998, resulting in the higher interest expense reported in
1999. As of December 31, 1999, no funds had been drawn on the new revolving credit facility. Interest capitalized on rig
construction projects during 1999 was $3.0 million as compared to $3.5 million in 1998. Gain on disposition of assets of $39.1
million included a $36.1 million gain on the sale of the 13 lower-48 land rigs.
In 1999, the Company generated an income tax benefit of $2.7 million as compared to income tax expense of $16.4 million in
fiscal 1998. The income tax benefit of $2.7 million in 1999 consisted of $11.2 million current tax expense related primarily to
foreign taxes and $13.9 million net deferred tax benefit related to operating losses incurred during 1999. The income tax
expense of $16.4 million in fiscal 1998 consisted of $14.3 million current tax expense related primarily to foreign taxes and
deferred tax of $2.1 million.
30
33
Liquidity and Capital Resources
As of December 31, 2000, the Company had cash, cash equivalents and other short-term investments of $63.3 million, an
increase of $17.0 million from December 31, 1999. The primary sources of cash in 2000, as reflected on the Consolidated
Statement of Cash Flows, were $87.3 million of net proceeds from a common stock offering, $31.9 million from the disposition
of assets, $27.3 million provided by operating activities and $16.9 million from the sale of investments. The net proceeds from
the equity offering of $87.3 million were the result of issuing 13.8 million shares of common stock during September 2000.
Proceeds from the disposition of assets included the sale of Rig 245 in Alaska for $20.0 million, the sale of various
non-marketable rigs and components and reimbursements by our customers for equipment lost in the hole. Also, the Company
sold its one million shares of Unit Corporation stock in September 2000 for $15.0 million. The Unit stock (and $40.0 million
cash) was received in 1999 in conjunction with the sale of the Company's 13 U.S. lower-48 land rigs to Unit.
The primary uses of cash in 2000 were $98.5 million for capital expenditures (net of reimbursements) and $48.3 million for
repayment of debt. Major projects during the year included completion of modifications to Rig 249 for a contract in
Kazakhstan for Tengizchevroil (TCO). Additionally, Rig 258 was constructed for the TCO project and is scheduled to arrive in
Kazakhstan during the first quarter of 2001. During 2000, Rig 259 was purchased and modified for a new project in the
Karachaganak field in Kazakhstan and should arrive during the first quarter of 2001. Also, modifications were completed on
Rig 25J in the Gulf of Mexico as a result of its scheduled five-year Coast Guard inspection. Repayment of debt included $43.5
million for the buyback of a portion of the Company's 5.5% Convertible Subordinated Notes from proceeds from the equity
offering and $4.1 million on a five-year note with Boeing Capital Corporation for Rig 75 in Nigeria.
The Company has total long-term debt, including the current portion, of $597.6 million at December 31, 2000. The Company
entered into a new $50.0 million revolving credit facility with a group of banks led by Bank of America on October 22, 1999.
This facility is available for working capital requirements, general corporate purposes and to support letters of credit. The
revolver is collateralized by accounts receivable, inventory and certain barge rigs located in the Gulf of Mexico. The facility
contains customary affirmative and negative
31
34
Liquidity and Capital Resources (continued)
covenants. Availability under the revolving credit facility is subject to certain borrowing base limitations based on 80 percent of
eligible receivables plus 50 percent of rig materials and supplies. As of December 31, 2000, the borrowing base was $50.0
million of which none had been drawn down but $14.6 million availability has been used to support letters of credit that have
been issued. The revolver terminates on October 22, 2003. On October 7, 1999 a subsidiary of the Company entered into a
loan agreement with Boeing Capital Corporation for refinancing the construction costs of Rig 75. The loan of $24.8 million plus
interest is to be repaid in 60 monthly payments of $0.5 million. The loan is collateralized by Rig 75 and is guaranteed by Parker
Drilling.
The Company anticipates that working capital needs and funds required for capital spending in 2001 will be met from existing
cash, other short-term investments and cash provided by operations. The Company anticipates cash requirements for capital
spending will be approximately $75 million in 2001. Should new opportunities requiring additional capital arise, the Company
will utilize cash and short-term investments and, if necessary, its revolving credit facility. In addition, the Company may seek
project financing or equity participation from outside alliance partners or customers. The Company cannot predict whether such
financing or equity participation would be available on terms acceptable to the Company.
32
35
OTHER MATTERS
Business Risks
Internationally, the Company specializes in drilling geologically challenging wells in locations that are difficult to access and/or
involve harsh environmental conditions. The Company's international services are primarily utilized by major and national oil
companies in the exploration and development of reserves of oil. In the United States, the Company primarily drills offshore in
the Gulf of Mexico with barge, jackup and platform rigs for major and independent oil and gas companies. Business activity is
dependent on the exploration and development activities of the major, independent and national oil and gas companies that
make up the Company's customer base. Generally, temporary fluctuations in oil and gas prices do not materially affect these
companies' exploration and development activities, and consequently do not materially affect the operations of the Company.
However, sustained increases or decreases in oil and natural gas prices could have an impact on customers' long-term
exploration and development activities which in turn could materially affect the Company's operations. Generally, a sustained
change in the price of oil would have a greater impact on the Company's international operations while a sustained change in the
price of natural gas would have a greater effect on U.S. operations. Due to the locations in which the Company drills, the
Company's operations are subject to interruption, prolonged suspension and possible expropriation due to political instability
and local community unrest. Further, the Company is exposed to liability issues from pollution arising out of its operations. The
majority of such risks are transferred to the operator by contract or otherwise insured.
Year 2000
The Company began preparing for Year 2000 in 1997 by replacing critical financial, human resources and payroll systems with
Year 2000 compliant off-the-shelf software. The Year 2000 problem was not the main reason for upgrading the information
technology platform; however, it was beneficial in achieving Year 2000 compliance. The Company also prepared contingency
plans to cover failures in its supply chain, communications, civil disturbances and information technology systems.
The Company estimates that $225,000 was spent during 1998 and 1999 in its Year 2000 compliance efforts. While the
majority of those costs were internal salaries, the Company's process for tracking internal costs did not capture all of the costs
incurred for each individual task on the project.
During the Year 2000 date transition and throughout the year ended December 31, 2000, the Company did not experience any
material failure with its information technology or non-information technology systems or key customers or suppliers.
33
36
Other Matters (continued)
Change in Fiscal Year
On July 10, 1998, the Company decided to change its fiscal year end from August 31 to December 31, effective January 1,
1999. The Company filed a Quarterly Report on Form 10-Q with the Securities and Exchange Commission covering the
transition period of September 1, 1998 to December 31, 1998.
Indonesian Operations
Due to political and currency instability in Indonesia during 1997 and 1998, the development of certain power plant projects, in
which the Company's subsidiaries were involved by providing management, technical and training support to an Indonesian
drilling contractor, was postponed or delayed. As a result, the customer, which was leading the development of the projects,
defaulted on payments to the Indonesian contractor, causing the Indonesian contractor to initiate arbitration proceedings against
two subsidiaries of the customer to collect these delinquent payments. In 1999, the arbitration panels awarded the Indonesian
contractor approximately $8.5 million, including interest. Due to the uncertainty over the economic viability of the power plant
projects and timing of repayment of guarantees by the Indonesian government, the Indonesian contractor elected to accept a
settlement of the outstanding awards, which will result in the payment of approximately $6.0 million to the Company's
subsidiaries by the end of 2001.
34
37
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders Parker Drilling Company
In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) of the Form 10-K,
present fairly, in all material respects, the financial position of Parker Drilling Company and its subsidiaries at December 31,
2000 and 1999, and the results of their operations and their cash flows for the years ended December 31, 2000 and 1999,
August 31, 1998, and the four months ended December 31, 1998, in conformity with accounting principles generally accepted
in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under
Item 14(a)(2) of the Form 10-K, presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are
the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of these financial statements in accordance with
auditing standards generally accepted in the United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
January 30, 2001
35
38
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands Except Per Share and Weighted Average Shares Outstanding)
Four Months
Year Ended Year Ended Ended Year Ended
December 31, December 31, December 31, August 31,
2000 1999 1998 1998
------------ ------------ ------------ ------------
Revenues:
U.S. drilling $ 148,411 $ 113,715 $ 49,648 $ 197,084
International drilling 185,100 182,908 76,248 249,481
Rental tools 42,833 27,656 10,245 32,723
Other 5 274 582 1,935
------------ ------------ ------------ ------------
Total revenues 376,349 324,553 136,723 481,223
------------ ------------ ------------ ------------
Operating expenses:
U.S. drilling 99,193 100,199 42,025 127,951
International drilling 132,882 126,226 52,623 167,651
Rental tools 15,994 10,910 4,416 13,749
Other 4 1,899 932 2,365
Depreciation and amortization 85,060 82,170 26,529 68,574
General and administrative 20,392 16,312 5,904 17,273
Restructuring charges -- 3,000 -- --
Provision for reduction in
carrying value of certain assets 8,300 10,607 4,055 --
------------ ------------ ------------ ------------
Total operating expenses 361,825 351,323 136,484 397,563
------------ ------------ ------------ ------------
Operating income (loss) 14,524 (26,770) 239 83,660
------------ ------------ ------------ ------------
Other income and (expense):
Interest expense (57,036) (55,928) (17,427) (49,389)
Interest income 3,691 1,725 619 5,732
Gain on disposition of assets 17,920 39,070 605 2,289
Other 2,243 1,326 (304) 2,235
------------ ------------ ------------ ------------
Total other income and (expense) (33,182) (13,807) (16,507) (39,133)
------------ ------------ ------------ ------------
Income (loss) before income taxes (18,658) (40,577) (16,268) 44,527
------------ ------------ ------------ ------------
Income tax expense (benefit) 4,323 (2,680) (1,635) 16,435
------------ ------------ ------------ ------------
Income (loss) before extraordinary gain (22,981) (37,897) (14,633) 28,092
Extraordinary gain on early retirement of
debt, net of deferred tax expense of
$2,214 3,936 -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ (19,045) $ (37,897) $ (14,633) $ 28,092
============ ============ ============ ============
Basic earnings (loss) per share:
Income (loss) before extraordinary gain $ (.28) $ (.49) $ (.19) $ .37
Extraordinary gain $ .05 $ -- $ -- $ --
Net income (loss) $ (.23) $ (.49) $ (.19) $ .37
Diluted earnings (loss) per share:
Income (loss) before extraordinary gain $ (.28) $ (.49) $ (.19) $ .36
Extraordinary gain $ .05 $ -- $ -- $ --
Net income (loss) $ (.23) $ (.49) $ (.19) $ .36
Number of common shares used in computing earnings per share:
Basic 81,758,825 77,159,461 76,828,879 76,658,100
Diluted 81,758,825 77,159,461 76,828,879 77,789,390
See accompanying notes to consolidated financial statements.
36
39
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars In Thousands)
ASSETS December 31, December 31,
2000 1999
------------ ------------
Current assets:
Cash and cash equivalents $ 62,480 $ 45,501
Other short-term investments 811 777
Accounts and notes receivable, net of
allowance for bad debts of $3,755 in 2000
and $5,677 in 1999 123,474 75,411
Rig materials and supplies 16,500 13,766
Other current assets 4,600 15,988
------------ ------------
Total current assets 207,865 151,443
------------ ------------
Property, plant and equipment, at cost:
Drilling equipment 940,381 956,957
Rental equipment 55,237 43,857
Buildings, land and improvements 22,455 20,657
Other 26,066 25,291
Construction in progress 68,120 38,154
------------ ------------
1,112,259 1,084,916
Less accumulated depreciation and
amortization 448,734 423,514
------------ ------------
Net property, plant and equipment 663,525 661,402
------------ ------------
Deferred charges and other assets:
Goodwill, net of accumulated amortization
of $27,786 in 2000 and $20,304 in 1999 196,609 204,090
Rig materials and supplies 12,414 13,363
Assets held for disposition 6,860 17,063
Debt issuance costs 10,311 13,202
Other 9,835 22,180
------------ ------------
Total deferred charges and other assets 236,029 269,898
------------ ------------
Total assets $ 1,107,419 $ 1,082,743
============ ============
See accompanying notes to consolidated financial statements.
37
40
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET, CONTINUED
(Dollars in Thousands)
December 31, December 31,
2000 1999
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,043 $ 5,054
Accounts payable 44,445 29,170
Accrued liabilities 32,756 29,562
Accrued income taxes 9,422 8,323
------------ ------------
Total current liabilities 91,666 72,109
------------ ------------
Long-term debt (Note 5) 592,584 648,577
------------ ------------
Deferred income taxes 18,467 28,273
------------ ------------
Other long-term liabilities 5,539 4,363
------------ ------------
Commitments and contingencies (Note 11) -- --
Stockholders' equity:
Preferred stock, $1 par value, 1,942,000
shares authorized, no shares outstanding -- --
Common stock, $.16 2/3 par value, authorized
120,000,000 shares, issued and outstanding
91,723,933 shares (77,372,040 shares in 1999) 15,287 12,895
Capital in excess of par value 431,043 343,374
Comprehensive income-net unrealized gain
on investments available for sale (net
of taxes of $190 in 2000 and $908 in 1999) 339 1,613
Retained earnings (accumulated deficit) (47,506) (28,461)
------------ ------------
Total stockholders' equity 399,163 329,421
------------ ------------
Total liabilities and stockholders' equity $ 1,107,419 $ 1,082,743
============ ============
See accompanying notes to consolidated financial statements.
38
41
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
Four
Year Year Months Year
Ended Ended Ended Ended
December 31, December 31, December 31, August 31,
2000 1999 1998 1998
------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (19,045) $ (37,897) $ (14,633) $ 28,092
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 85,060 82,170 26,529 68,574
Gain on disposition of assets (17,920) (39,070) (605) (6,851)
Gain on early retirement of debt,
net of deferred tax expense (3,936) -- -- --
Provision for reduction in
carrying value
of certain assets 8,300 10,607 4,055 --
Deferred tax expense (benefit) (11,302) (13,888) (6,147) 2,100
Other 5,320 3,503 1,875 3,992
Change in assets and liabilities:
Accounts and notes receivable (47,954) 28,554 7,569 8,886
Rig materials and supplies (1,981) (721) (257) (5,544)
Other current assets 11,150 (3,263) 658 3,065
Accounts payable and
accrued liabilities 18,356 (21,569) (10,232) 40,383
Accrued income taxes 1,098 747 1,544 1,128
Other assets 125 5,312 871 (306)
------------ ------------ ------------ ------------
Net cash provided by operating
activities 27,271 14,485 11,227 143,519
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets 31,912 63,868 1,481 13,470
Capital expenditures
(net of reimbursements) (98,525) (49,146) (52,711) (196,078)
Acquisition of Bolifor -- -- (500) (2,189)
Acquisition of Hercules -- -- -- (195,599)
Purchase of short-term investments -- (777) -- (18,708)
Proceeds from sale of short-term
investments 16,925 -- 9,999 11,547
Other-net -- 650 1,000 (766)
------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities (49,688) 14,595 (40,731) (388,323)
------------ ------------ ------------ ------------
See accompanying notes to consolidated financial statements.
39
42
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(continued)
(Dollars in Thousands)
Four
Year Year Months Year
Ended Ended Ended Ended
December 31, December 31, December 31, August 31,
2000 1999 1998 1998
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt $ -- $ 35,186 $ 10,000 $ 204,692
Proceeds from common
stock offering, net 87,313 -- -- --
Payments for early retirement
of debt (43,477) -- -- --
Principal payments under
debt obligations (4,854) (43,017) (1,441) (124,287)
Repurchase of common stock -- -- -- (302)
Other 414 (62) 5 4
------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities 39,396 (7,893) 8,564 80,107
------------ ------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents 16,979 21,187 (20,940) (164,697)
Cash and cash equivalents at
beginning of year 45,501 24,314 45,254 209,951
------------ ------------ ------------ ------------
Cash and cash equivalents at
end of year $ 62,480 $ 45,501 $ 24,314 $ 45,254
============ ============ ============ ============
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest $ 56,608 $ 56,806 $ 22,802 $ 46,892
Income taxes $ 14,527 $ 10,461 $ 2,968 $ 13,207
Supplemental noncash investing and
financing activity:
1.0 million shares of Unit
Corporation stock received on
sale of U.S. lower-48 land rigs $ -- $ 7,562 $ -- $ --
Net unrealized gain (loss) on
investments available for sale
(net of taxes of $717 in 2000
and $908 in 1999) $ (1,274) $ 1,613 $ -- $ --
Note receivable for sale of
platform rig $ -- $ 1,645 $ -- $ --
See accompanying notes to consolidated financial statements.
40
43
PARKER DRILLING COMPANY AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity (Dollars in Thousands)
Capital Retained