ipaa 2005 oil & gas investment symposium april 18, 2005
DESCRIPTION
Robert L. Parker Jr – President & CEO David C. Mannon – Sr. VP & COO. IPAA 2005 Oil & Gas Investment Symposium April 18, 2005. Forward Looking Statements. - PowerPoint PPT PresentationTRANSCRIPT
Robert L. Parker Jr – President & CEO
David C. Mannon – Sr. VP & COO
IPAA2005 Oil & Gas
Investment Symposium
April 18, 2005
IPAA2005 Oil & Gas
Investment Symposium
April 18, 2005
2
Forward Looking StatementsForward 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.
3
Investment HighlightsInvestment 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
4
Parker Drilling OverviewParker 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
5
Business StrategiesBusiness 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
6
Recent DevelopmentsRecent 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
7
Significantly Reduce DebtSignificantly 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
8
Utilization TrendUtilization Trend
Note: Adjusted for new Marketable Rig Count
9
EBITDA MultiplesEBITDA Multiples
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
Transocean ENSCO TODCO Nabors Patterson HP Precision Grey Wolf Pride Parker
2005 2006
* EBITDA multiples are used to quantify the premium value placed on a company’s stock.
As of April 11, 2005
10
Company FocusCompany 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
11
Gulf of MexicoGulf of Mexico
ColombiaColombiaColombiaColombia
PeruPeru
NigeriaNigeria
ChadChad
KazakhstanKazakhstan
Russia
Sakhalin Sakhalin IslandIsland
ChinaChina
KuwaitKuwait
IndonesiaIndonesia
New New ZealandZealand
Papua New Papua New Guinea Guinea
BangladeshBangladesh
Land Barge Project Management Labor Contract
MexicoMexico
Quail ToolsQuail Tools
Geographic and Asset DiversificationGeographic and Asset Diversification
TurkmenistanTurkmenistan
12
Revenue and EBITDA SourcesRevenue and EBITDA Sources
Revenues 2004
US Offshore22%
US Offshore26%
Quail16%
Quail29%Int’l Offshore
8% Int’l Offshore(4%)
CIS 26%
CIS 30%
Asia Pacific11%
Asia Pacific 11%
Latin Am. 2%
EBITDA 2004
Latin Am. 9%
Discontinued Ops6%
Discontinued Ops8%
13
OutlookOutlook
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
14
Increase UtilizationIncrease 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
15
Status of GOM BusinessStatus of GOM Business
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
Rig Type Utilization Current 4Q04 3Q04
16
High Margin Rental Tool BusinessHigh 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
Gross Margins 64.9% 54.1% 57.8% 58.2%
17
Quail ToolsQuail Tools
18
19
Outstanding Safety RecordOutstanding Safety Record
Quail Tools
12%
U.S. Offshore 29%
International Land 29%
International Offshore
19%
Project Mgmt.
11%
0
1
2
3
4
5
1998 1999 2000 2001 2002 2003 2004
IADC
Parker
(1) TRIR = Recordable Incidents/100 Workers per Year
Total Recordable Incidence Rate (1)
20
Near-Term FocusNear-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
21
Favorable Industry OutlookFavorable 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