Parker Drilling Conference Call - 1st Driller release/market impressions...
Dayrates & Utilization:
US Land Rigs --- utilization at 71% - dayrates at $8545 versus prior quarter of 76% utilization and dayrates of $8705. They are seeing some softening to $8,000 and see some additional utilization and dayrate softening possible.
International Market Land Rigs --- 70% utilization @ $15,979 versus prior quarter at 75% utilization & $15,272 dayrates.
Barge Drilling --- Deepwater, Intermediate depth and International Barge segments at 100% utilization with stable dayrates -- deep @ $18,817 vs. $19,646; intermediate @ $13,346 vs. $14,978; international $27,726 vs. $26,290. They were especially positive on this segment and stated that they have very limited competition (FLC).
Jack Ups --- 67% utilization (4 of 6 rigs) dayrate average of $27,175 versus last quarter of 100% (6 of 6) and dayrates of $28,555. Parker expects 1 jack up to be on contract any moment and emphatically stated that there is'' NO freefall'' in GOM jack up dayrates. They are just now seeing increased jack up activity. They additionally stated that they have an opportunity under an ''umbrella'' created by deeper-water ''Premium"" jack ups moving into shallower natural gas oriented jack up markets; in that they could underbid substantially these ''premium rigs'' and that they did not expect to lose as much business as the market had expected in relation to the movement of the premium jack ups into shallow water... (this bodes well for CDG and perhaps MDCO with their alleged ''cheap, rusty old - but low cost rigs'' - not my terms or PKD's, but in reference to prior posts commenting on CDG & MDCO's ''junk'' rigs in the GOM).
Overall PKD has 71 of 101 ''marketed'' rigs under contract. All stacked rigs are in ''warm'' status. 3 rigs in construction/repair and 21 cold stacked rigs. Mallard and Quail Oil tools divisions very strong.
They commented on the strong Deepwater & International markets. They were especially positive on the South American market and specifically spoke enthusiastically on Columbian projects by Harken & Seven Seas. They are positive on Caspian Sea & Kazakhstan's future. International, Deepwater and Land Rigs in Central/South America America are very strong - good news for land drillers with strong presence in these markets... Also mentioned that they see the change in Government in Nigeria as a positive - and are positive on the Nigerian market as well as most International sectors.Expect recovery in Indonesian geothermal drilling as well.
They acknowledged some additional softening in Land Rig Dayrates are coming, but seemed very confident in the stability of GOM Jack Up dayrates and actually are just now seeing increased activity in the GOM Jack Up market - this was a major positive from what I was expecting. No surprise from the strength in Deepwater & International markets, Barge drilling was perhaps the best sector dayrate and utilization-wise... They do expect to see Earnings down in the next quarter from this quarter, but they and the Drillers in general; are expecting a rebound in the fall and perhaps a surprisingly strong Q1 1999.
This paints a much more positive picture than the analyst revisions and the media had portrayed in my opinion. While we are NOT back to the high flying days or rates of last fall - the bottom is NOT in freefall and we now know what dayrates & utilization rates are - I feel driller stocks are way oversold in respect to these numbers and Parkers overall forward looking expectations. The upcoming additional earnings releases if they concur with PKD will be very good news for the oilpatch IMHO...
note to PKD longs; Parker is extending depreciation life of their land rigs from 10 to 15 years and will take $1.3 Million a quarter for this in FY 1999 going forward. They have $110 million in liquidity ($35 M in cash and a $75m credit line) for acquisitions in International, Deepwater or Oil Tools. |
