Bank of America 2007 Energy Conference - IIS Windows …library.corporate-ir.net/library/10/105/105329/items/270593/PKD... · Bank of America 2007 Energy Conference November 15, 2007

Bank of America2007 Energy Conference

November 15, 2007

Robert L. Parker – Chairman & CEOKirk Brassfield – Sr. VP & CFO

Bank of America2007 Energy Conference

November 15, 2007

Robert L. Parker – Chairman & CEOKirk Brassfield – Sr. VP & CFO

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 day rates, general industry conditions including bidding activity, future operating results of the Company’s rigs and rental tool operations, capital expenditures, income tax matters, expansion and growth opportunities, financing activities, debt repayment and other such matters, are forward-looking statements. Although the Company believes that its expectationsstated 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, 2006. Each forward-looking statement speaks only as of the date of this presentation, and the Company undertakes no obligation to publicly update or revise any forward-looking statement.

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Company StatisticsCompany Statistics

• Market capitalization $0.95B• Enterprise value $1.18B• Exchange/Ticker NYSE: PKD• Trading volume 1.9M shares daily• Shares outstanding 111.71M• Institutional ownership 65%• Debt to total capitalization 41.6%

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Company OverviewCompany Overview

• Worldwide service company providing drilling, rental tool services and project management to the energy industry

Global Contract Drilling

• 3Q07 saw initial impact of new International contracts

• 11 new rigs delivered in late 2006 and 2007

• 2 newly designed International land rigs to be delivered in 2008

Quail Tools

• 2006/2007 organic expansion completed in third quarter 2007

• Record EBITDA in 3Q07

Project Management Services

• High-profile, technically challenging projects

• Revenues nearly tripled in 2006 vs. 2003

73-Years of Innovation73-Years of Innovation

• Founded 1934• 1965 – Drilled first 18,000+ foot well• 1969 – Patented Heli-Hoist® technology• 1972 – 28,500 foot depth record (Ralph Lowe Estate #1-17)• 1977 – Parker 157 drills deepest test well to date in Kuwait• 1978 – First “rig on wheels” for Prudhoe Bay• 1980 – First American land driller in China• 1991 – First Western driller to work in Soviet Union• 1998 – Designs & builds first Arctic-class barge rig (Rig 257)• 2002 – Designs & builds “Yastreb” for Sakhalin-1• 2005 – Best safety record of all drilling contractors (IADC)• 2007 – Extended Reach Drilling Record – 37,016 feet• 2007 – Named one of America’s Safest Companies by

Occupational Hazards magazine• 2007 – New High-Efficiency Rigs

Innovation is Foundation of Growth Strategy 5

Int’l Land Rigs Return to Work in 2007Int’l Land Rigs Return to Work in 2007

23 rigs begin operations or receive new contracts• 7 rigs were inactive at the beginning of the year

• (121, 165, 221, 249, 258, 230, 253)

• 4 rigs are new PKD rigs• (264, 265, 266, 267)

• 6 rigs are new Saudi JV rigs• 5 rigs received new contracts

• (256, 107, 216, 236, 231,122)

• Average Contract Term of 2.68 years• 18 rigs begin 3-year contracts• 2 rigs begin 2-year contracts• 3 rigs begin 1-year contracts

• Average dayrate improvement of ~75%6

Areas of OperationAreas of Operation

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AlaskaAlaska

MexicoMexico

Quail ToolsQuail Tools

ColombiaColombia

NewNewZealandZealand

IndonesiaIndonesia

Papua NewPapua NewGuineaGuinea

ChinaChina

KuwaitKuwait

Sakhalin Sakhalin IslandIsland

Kazakhstan

Turkmenistan

Bangladesh

Land Barge Under Construction Project Management

Saudi ArabiaSaudi ArabiaAlgeriaAlgeria

Gulf of MexicoGulf of Mexico

LibyaLibya

One additional land rig under construction

Fleet OverviewFleet Overview

Market Land Rigs

Barge Rigs

O & M Contracts

US 16 1CIS 8 1 2Latin America 8 1 -Asia Pacific 9 - 2Africa & Middle East 9* - 1Under Construction 2 - -Total 36 18 6

* includes 6 rigs in Saudi JV

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Demand DriversDemand Drivers

• Searching for and developing large fields and significant reserves in challenging frontier regions

• Drilling deeper, more directional, and extended-reach wells

• Search often leads to environmentally sensitive areas

• Shortage of qualified personnel• HSE is a critical performance variable used to

evaluate buying decisions

Big Reserves Are Harder to Reach9

Parker’s SolutionParker’s Solution

• Globally integrated solutions for lower total cost of drilling investment in challenging and frontier areas– Preferred rigs– Experienced and trained crews– A leader in safety and operations in environmentally

sensitive areas– Rental tools on demand– “Smart Iron” services: value-added services

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“Smart Iron” Services“Smart Iron” Services

• Front End Engineering Design (FEED)

• Engineering, Procurement, Construction and Installation (EPCI)

• Operations and maintenance of 3rd party rigs

• Project management

• Training

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Drilling in Frontier Environments Drilling in Frontier Environments

• Reputation for operational expertise and experience– Yastreb – Sakhalin Island, Russia – Orlan platform – Sakhalin Island,

Russia– Rig 257-north Caspian Sea– Liberty Project, Alaskan Beaufort

Sea• Operation and maintenance of

third party rigs – Additional services such as

engineering, logistics, HSE programs, and preventive maintenance programs

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Technical Leadership - Case Study 1Technical Leadership - Case Study 1

Kazakhstan AreaAverage Cost Per Well

$24.7

$20.6$18.2

$16.6$15.0

2.94

1.981.76

1.23

0.94

$0

$5

$10

$15

$20

$25

$30

2001 2002 2003 2004 2005

Mill

ions

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0TRIR

Well Cost TRIR

- 39% Cost Decrease- 200% Safety Improvement

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Technical Leadership - Case Study 2Technical Leadership - Case Study 2

Mexico AreaTotal Drilling Time

0

50

100

150

200

250

300

J-52

3

J-53

2

J-52

2a

J-28

J-50

4

J-60

0

J-52

1

JU-5

06

JU-5

43

JU-6

54

TE-5

13

TE-5

19

Day

s

Other Contractors (1998-2003) Parker (2004-2005)

35% Decrease!

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Extended Reach Drilling (ERD)Extended Reach Drilling (ERD)

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

36,000

38,000

China

German

yChin

aSak

halin

China

China

German

yAus

tralia

China

Norway

-N Sea

Sakha

linUK-W

ytch

Osebe

rg B47

Sakha

linSak

halin

Sakha

linUK-W

ytch

Sakha

linSak

halin

Sakha

linSak

halin

Argenti

naUK-W

ytch

Sakha

lin

Parker Drilling Other

63% of the longest-reach ERD wells have been drilled by Parker

Industry-Leading Safety PerformanceIndustry-Leading Safety Performance

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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

2005

*20

06Curre

nt

IADCParker

(1) TRIR = Recordable Incidents/100 Workers per Year * Lowest TRIR for IADC

Total Recordable Incidence Rate (1)

Quail Tools PerformanceQuail Tools Performance

• Consistently high margins• Business cycle neutral• Six locations (Louisiana, South TX,

West TX, East TX, Wyoming and ND)• New Texarkana facility opened

April 2, 2007• Satellite location in Williston, ND

• Customers are majors and independents on land and offshore –including deepwater

• Marketing synergies with U.S. drilling operations

0

20

40

60

80

100

120

140

2002 2003 2004 2005 2006 3Q 07

Revenue

EBITDA

1701020304050607080

Lower-Risk, High-Profit Exposure to Active U.S. Resource Plays

and Deepwater GOM

2002 2003 2004 2005 2006 3Q 07

Barge Rig Dayrates – GOM Barge Rig Dayrates – GOM

12,000

16,000

20,000

24,000

28,000

32,000

36,000

40,000

44,000

48,000

52,000

56,000

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

Curren

t

Intermediate Deep

$17,700

$13,000

$46,700

$40,400

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Utilization Trend Utilization Trend

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Q 04

2Q 04

3Q 04

4Q 04

1Q 05

2Q 05

3Q 05

4Q 05

1Q 06

2Q 06

3Q 06

4Q 06

1Q 07

2Q 07

3Q 07

Current

Projec

ted

US Barge Rigs International Rigs Total Utilization 19

Growing EBITDA MarginsGrowing EBITDA Margins

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EBITDA/EBITDA%

$205

$162

$110$105

$192

27% 27%

41%

30%

35%

$50.0

$75.0

$100.0

$125.0

$150.0

$175.0

$200.0

$225.0

2003 2004 2005 2006 3Q 0710.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

• Gulf of Mexico barge business and Quail Tools driving growth in 2005 and 2006

• Escalating day rates in international land contract rollovers, driving growth in 2007 and 2008

• New, international long-term contract daily revenues increasing by an average of 75 percent

Segment Revenue and ProfitabilitySegment Revenue and Profitability

2006EBITDA

2006 Revenues

U.S. Offshore

Quail Tools

Latin America

Asia Pacific

CISAfrica &M.E.

U.S. Offshore

Quail Tools

Latin America

Asia PacificCIS

Africa & M.E.

32.6%

20.8%

5.2%

13.4%24.0%

4.0%

45.4% 31.9%

0.1%13.5%

9.4%

(0.3%)

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Valuation Relative to PeersValuation Relative to Peers

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

Transo

cean

Diamond

Noble

Pride

Nabors

Rowan

EnscoHerc

ules

Parker

Grey W

olfPatt

erson

EBITDA Multiples - 2008E

Value Opportunity Relative to Peers* EV/EBITDA per Lehman Brothers estimates as of October 29, 2007

Strengthening the Balance Sheet Strengthening the Balance Sheet

590 572

481

380 354329250

350

450

550

650

2002 2003 2004 2005 2006 3Q 07

66%75% 76%

59%

42% 42%

0%

20%

40%

60%

80%

2002 2003 2004 2005 2006 3Q 07

Outstanding Debt

Debt/Capitalization

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2007 Financing2007 Financing

• $125 Million Convertible Notes due July 2012– Low Coupon Rate - 2.125%– Initial Conversion Price of $13.85 hedged to $18.29– Significant cash interest savings

• Proceeds from Convertible Notes used to redeem $100MM Floating Rate Notes in September 2007

• Revolver increased from $40MM to $60MM in September 2007 and extended terms for 5 years

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Demand-Driven InvestmentsDemand-Driven Investments

• $72MM – Construction of four 2,000hp land rigs• $29MM – Construction of 77B, ultra-deep drilling barge• $8MM – Conversion of workover barge 12B to a deep

drilling barge

020406080

100120140

2003 2004 2005 2006 3Q 07

Maintenance Major Projects Quail Tools

• $50MM – Expansion of Quail Tools into East Texas, northern Rocky Mountains, North Dakota (20% in 2006)

• 2007 capital spending estimated to be $235MM

Strategically Investing in Profitable Growth Markets 25

Parker Investment Value Parker Investment Value

• Provides globally integrated solutions for lower total drilling investment in challenging and frontier environments

• High performance = lower total cost of ownership• Strong focus on growing international markets• Growing revenue, cash flow and earnings

– New, preferred rigs coming to market – International contract renewals– O&M contracts– Rental tools– Improving balance sheet

• Maintain and strengthen competitive advantages in deep and frontier drilling through technological leadership

• Continue our 73-year heritage of technological and performance leadership

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• Appendix– Historical Financial Performance

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Historical Financial PerformanceHistorical Financial Performance

Quail Tools 12%

U.S. Offshore 29%

International Land 29%

International Offshore

19%

Project Mgmt. 11%

($ in millions) 2003 2004 2005 2006 3Q 07

Revenues $339 $377 $532 $586 $474

EBITDA 98 103 162 205 192

Interest Expense 54 50 42 32 20

Current Taxes 17 15 16 21 43

Deferred Taxes 0 0 (45) 16 16

Net Income ($110) ($47) $99 $81 $70

Capex 35 47 70 195 191

Total Assets 848 727 804 901 1081

Debt 572 481 380 329 354

Debt-to-Cap 75% 76% 59% 42% 42%

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