Parker Drilling Company (PKD)

Q4 2012 Earnings Conference Call

February 21, 2013 11:00 ET

Executives

Richard Bajenski - Director, Investor Relations

Bobby Parker - Chairman

Gary Rich - President and Chief Executive Officer

Kirk Brassfield - Senior Vice President and Chief Financial Officer

Analysts

Trey Cowan - Clarkson Capital Markets

John Keller - Stephens

Daniel Burke – Johnson Rice

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Parker Drilling Fourth Quarter 2012 Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Thursday, February 21, 2013.

I would now like to turn the conference over to Mr. Richard Bajenski. Please go ahead sir.

Richard Bajenski - Director, Investor Relations

Thank you, and good morning to everyone who has joined us today for Parker Drilling’s 2012 fourth quarter conference call. This is Richard Bajenski, Director of Investor Relations. And joining me today are Bobby Parker, Chairman; Gary Rich, President and CEO; and Kirk Brassfield, Senior Vice President and Chief Financial Officer.

In the course of our comments today, we may make statements regarding management’s expectations for the company’s future performance that we believe will be informative and beneficial to our shareholders. These statements are considered forward-looking statements within the meaning of the Securities Act. Each forward-looking statement speaks only as of the date of this call and actual results may differ materially due to various factors we have referenced in our public filings and other factors addressed during this call including changes in market conditions affecting our industry.

We will also refer to non-GAAP financial measures such as adjusted EBITDA and non-routine items. Please refer to the table in our current press release or on the company’s website for a definition of adjusted EBITDA and a reconciliation of this measure to the comparable GAAP measure and for further information regarding non-routine items. Our first comments today are from Bobby Parker. Bobby?

Bobby Parker - Chairman

Thank you, Rich, and welcome everyone. Good morning and welcome to our conference call. Earlier today, we reported our 2012 fourth quarter results. We will review our operational performance and financial results in detail in a moment. Before that takes place though, I wish to acknowledge the departure of Kirk Brassfield, our long serving CFO. Though Kirk will not be leaving us until the end of April, this may be his last appearance on a Parker Drilling earnings call. So, I am going to take this opportunity to say farewell.

Kirk will be leaving Parker in better shape and in a better condition than it was when he took over the CFO responsibilities. He has been instrumental in getting our balance sheet de-levered and sustaining the company’s ability to invest despite several tough commodity cycles and some complicated international issues. In addition, he has built a sound financial organization. He has been a leader in implementing new technologies to improve our processes, internal controls and financial reporting and has been a control voice for doing the right thing. It is my honor then to say this farewell to Kirk to recognize his contribution to Parker’s success and our shareholders’ well being. So, Kirk, on behalf of us at Parker, I thank you for all you have done for the company, for your commitment, and your dedicated service, we wish you a very successful future. But until April 30, Kirk is the CFO and he will continue providing the same leadership and guidance he always has. He is with us today to take us through the financial results of the fourth quarter, which he will do in a few minutes.

What Gary and Kirk will cover has not been made easier by industry trends during this period. In the U.S., the fourth quarter price of oil was down 5% compared to the third quarter, continuing a year long slide during which oil price has declined around 15%. And though natural gas prices finished the year on upward trend, the increase only succeeded in getting prices back to the mid $3 range, a little higher than they are right now. They surely contributed to the operator’s decision to scale back their drilling throughout the year including a 5% decline in the U.S. land rig count in the fourth quarter.

Since year end though, with natural gas prices have for the most part moved sideways, oil prices have reversed their decline and began to move upward. This maybe a little too data to call this a trend, but I am pleased to see that U.S. land rig count has moved slightly upward lately. Trends in the U.S. offshore and international markets have been more encouraging. The U.S. offshore rig count rose through 2012 ending the year at 51 rigs active. That trends continues into 2013 and U.S. offshore rig count stood at 55 rigs most recently. Meanwhile, the industry surveys indicate the international market is expected to have one of the highest growth rates in E&P spending following the year of solid growth in 2012. Included are expected increases in land markets in Latin America, the Middle East and in various Asian areas. Overall, weak market trends in the U.S. land drilling in late 2012 were a harsh backdrop for our domestic operations and appear now to be improving. Meanwhile offshore U.S. and international trends indicated available opportunities.

I will turn this over to Gary to review how our business adverse these conditions and the current direction of our operations. Gary.

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