Investor Presentation June 2019 PKD (NYSE) 1 Rig 273 Alaska - - PowerPoint PPT Presentation

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Investor Presentation

June 2019

PKD (NYSE) Rig 273 Alaska

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Forward-Looking Statements Caution

The following presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the securities laws of the United States. All statements, other than statements of historical facts, addressing activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, the outlook for equipment and utilization and day rates, general industry conditions including bidding activity, future results of the Company’s operations, capital expenditures, income tax matters, expansion and growth opportunities, financing activities, debt repayment, returns on capital, cash flows and other such matters, are forward-looking statements. Although the Company believes 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, including reports on Forms 10-K and 10-Q. Each forward-looking statement speaks only as of the date of this presentation, and the Company undertakes no obligation to publically update or revise any forward-looking statement. Non-GAAP Measures: Included in this presentation are certain non‐GAAP financial measures as defined under SEC Regulation

• G. Investors are urged to consider closely the disclosure in Company’s Annual Report on Form 10‐K, Quarterly Reports on Form

10‐Q and Current Reports on Form 8‐K and any reconciliation to GAAP measures provided in this presentation.

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Parker Drilling

A service-driven company, we offer “operational execution” services and products to mitigate risk and control costs so our customers can deliver safe and profitable wells.

• Drives a motivated and

educated workforce

• Promotes enterprise

alignment

• Serves in the best interest
• f stakeholders
• Maximize return on

capital

• Enhance flexibility in a

cyclical industry

• Reliable partner, trusted

advisor

• Key role in customer

success

• Known for operational

execution

• Enhances operating

leverage and economies

• f scale
• Optimizes resource

allocation

• Enrich market intelligence
• Absorbs industry volatility
• Delivers share

appreciation

• Facilitates the return of

capital

Strong Brand Equity Team Oriented and Continual Improvement Culture Capital Efficient Business Model Scale in Key Geographies and Product Lines ROC Company

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Operational Execution Defined

Optimized Drilling Cycle

Increased Performance Increased Reliability Reduced Cost Reduced Risk

• Procedural Compliance
• Quality & HSE Focus
• Teamwork
• Accountability
• Empowerment

Operational Discipline

• Values
• Objectives
• Project Assessment
• Needs
• Requirements

Customer Alignment

• KPIs
• Assessment
• Review
• Improvement Plans
• Knowledge Transfer

Continual Improvement

• Right People
• Right Tools
• Right Certifications
• Competency Assurance

Planning & Resources

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Where We’re Heading

Total Rentals O&M Owned Rigs

36% 18% 46%

2012

Revenue $678 M Rebalanced revenue mix by investment bias toward capital efficient opportunities

53% 33% 14%

Revenue $528 M

Current 1

Grow scale in target geographies and product lines based upon capital efficient platform

1 LTM as of 1Q’19

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Scale in Key Geographies

Approximately 95% of our revenue comes from three key geographies

Middle East & Caspian Revenue: 18 % of Total 2018

Services:

Locations: Kazakhstan, Kuwait, Saudi Arabia, Iraq, UAE

Arctic Revenue: 36 % of Total 2018

Services: Drilling

Locations: Sakhalin Island, Alaska, Atlantic Canada

North America Revenue: 40 % of Total 2018

Services: Drilling and Rental

Locations: U.S (Lower 48), Mexico

Drilling and Rental

Other countries of operation

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United States 43% International 57% Offshore 33% Onshore 67%

621 465 293 260 225 251 348 247 134 183 256 277

• 200

400 600 800 1,000 1,200

2014 2015 2016 2017 2018 LTM

Revenue by Business

Drilling Rentals

$ millions 161 104 51 37 6 11 134 82 14 53 97 110

• 50

100 150 200 250 300 350 2014 2015 2016 2017 2018 LTM

Adjusted EBITDA excluding G&A2 by Business

Drilling Rentals

$ millions

1LTM as of 1Q’19 2Adjusted EBITDA excluding G&A is a non-GAAP measure. Please refer to the appendix for the definition and reconciliation

Company Overview

• 85-year history of delivering operational excellence to

the oil and gas industry

• Operated in 65 countries, currently active in 20
• Headquartered in Houston, Texas
• Dedicated global workforce totaling ~2400 employees

1 1

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Rental Tools & Well Services Overview

Well Intervention 1%

1 LTM as of 1Q’19

Middle East / Caspian 17%

Revenues by Geography 1

North Sea 5% Other 7% North America 71%

Revenues by Product Offering 1

Surface & Tubular 84%

• High return, quick payback investment opportunities
• Diversified product offerings across core geographies
• Surface & Tubulars – drill pipe, tubing, drill collars,

pressure control equipment, and more

• Well Construction – tubular running services and

downhole tool rentals

• Well Intervention – fishing and related services and

whipstocks

• A leading supplier in U.S. land and offshore Gulf of Mexico

markets

• A solid international platform with major presence in the

Middle East

• Opportunities to expand by leveraging existing infrastructure

and resources

Well Construction 15%

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U.S. Rentals – Leading U.S. Supplier

Parker U.S. Rentals Growth vs. US Rig Count 3 U.S. Rental Revenues by Market 1

25% 75%

U.S. Offshore U.S. Land

• Well developed infrastructure – presence in

every major U.S. basin

• Diverse mix of customers and outstanding

customer service

• Engineering and QHSE capabilities for

servicing offshore and high-profile projects

• Leading supplier of premium drill pipe

Unique Operating Strengths

1 LTM as of 1Q’19 2 The Parker U.S. Tubular Goods Utilization Index represents the proportion of tubular goods (drill pipe and related products) that were on rental compared to the total inventory of

tubular goods, and indexed to a base level of tubular goods inventory on rental. Tubular goods rentals do not account for all the U.S. Rental Tools segment’s revenues.

3 Source Baker Hughes-GE rig data

130% 140% 150% 160% 170% 180%

Q2 ‘16 vs Q1 ‘19

% Δ Avg US Rig Count % Δ Tubular Utilization Index % Δ US Rental Revenue

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Leader in New Drill Pipe Technology

Early adoption of new drill pipe technology, coupled with our focus on operational execution, helps our customers deliver increasingly complex wells more efficiently

Benefits

Performance

• High strength tool joints
• Higher torque rating
• Improved hydraulic
• Better fatigue resistance

Ease of Use

• Faster make up times
• Minimizes stabbing damages
• Improved tong gripping

Lower Maintenance Cost

• Reduced repair frequency
• Increased refacing amount
• Less recut loss

U.S. Land Well Lateral Lengths & Efficiencies

6,683 7,627 6,489 7,056 6,452 5,704 8,505 6,588 10,100 8,660 9,714 8,236 8,881 7,498 6,798 9,735 8,947 10,510

Anadarko 2014-2018 Appalachian 2014-2018 Delaware 2014-2018 DJ 2014-2018 Gulf Coast 2014-2018 Mid-Con 2014-2018 Midland 2014-2018 PRB 2014-2018 Williston 2014-2018 2018+ Avg. Lat Length (ft) 2014-2018 Avg. Lat Length (ft)

536 931 610 1,334 984 611 762 453 1,009 651 1,102 711 1,565 1,137 774 833 596 1,348

Anadarko 2014-2018 Appalachian 2014-2018 Delaware 2014-2018 DJ 2014-2018 Gulf Coast 2014-2018 Mid-Con 2014-2018 Midland 2014-2018 PRB 2014-2018 Williston 2014-2018 2018+ Avg. ft/d 2014-2018 Avg. ft/d

Source: DrillingInfo DI Rig Analytics

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International Rentals - Improving Performance

Forward Plan

• Focusing on scale in core markets with

sustainable activity

• Automated Casing Running Tool (CRT)

performance exceeding competitive technologies

• Leverage Well Construction success to

pull through additional product lines

6.1 6.3 7.6 8.5 8.6 10.4 10.0 9.9 10.6

1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Well Construction Revenues Growth

$ millions

Revenue Scale in Core Markets

2014A

Saudi Arabia UAE Iraq Other

Current 1

Saudi Arabia UAE Iraq Other

Revenues by Product Offering 1

Surface & Tubular 45% Well Construction 51% Well Intervention 4%

1 LTM as of through 1Q’19

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1 LTM as of 1Q’19 2 Excluding reimbursable revenue 3 Rig count as of March 31, 2019

Drilling Services Overview

56% 44%

Revenues1,2 by Arena

Land Offshore

Revenues by Geography 1,2,3

Middle East / Caspian: 23% Owned Rigs: 8 O&M Rigs: 37 North America: 11% Owned Rigs: 16 O&M Rigs: 1 Arctic: 65% Owned Rigs: 3 O&M Rigs:6 Other: 1% Owned Rigs: 2 O&M Rigs: 2

• Expand capital efficient O&M through

technical service and operational resources

• Onshore, offshore, remote and harsh-

environment expertise

• Highly capable fleet to meet complex

drilling requirements

• Developing scale in large and growing

international markets

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Expanding O&M Business

$32 $43 $42 $161 2019 2020 2021 2022+

O&M Revenue

O&M Contracted Backlog 1

Total backlog of $278 million as of June 2019

$ millions

Recent Notable O&M Project Awards

• Holly Platform – ExxonMobil Offshore California
• West White Rose Project – Husky Energy Offshore

Atlantic Canada

1 O&M revenue backlog is an estimate of O&M drilling revenues from drilling contracts. It does not include owned–asset drilling revenues,

rental revenues and all other revenues we may earn, including those for added services, reimbursables, mobilization or demobilization; nor does it anticipate revenue reductions that may be due to conditions that would lead to reduced dayrates or early terminations.

2 Rig count as of March 31, 2019

31 41 3 5 10 20 30 40 50 2012 Current

Rig Count

O&M by Arena 2

Land Offshore

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International vs. US Volatility 1

International & Alaska Drilling Services

• International markets have historically

provided better value and less volatility compared to the U.S.

• Recovery in many international markets

is beginning to take shape in earnest

• Opportunities to restart idle assets with

minimal capital expenditure requirements (i.e. Alaska and Kazakhstan) Highlights

9 28 7 14 13 '08 '09 - '11 '14 '16 - 17 '17 - 18 15% 117% 7% 129% 16%

United States

Average change in rig count: 57% Average bull market length: 14 months

International

Average change in rig count: 20% Average bull market length: 33 months

Bear Market

… while the US market is prone to more volatility during downturns

Average change in rig count: (31%) Average bear market length: 12 months

United States

Average change in rig count: (21%) Average bear market length: 17 months Change in rig count

International

Bull Market

International rig counts have seen longer periods of expansion in bull markets… 4 59 30 '08 '9 - 14 '16 - 19 5% 40% 15% 9 24 20 4 4 '08 - '09 '11 - '13 '14 - '16 '17 '19 (55%) (13%) (79%) (4%) (5%) 7 27 '08 - '09 '14 - '16 (10%) (31%)

1Source: Deutsche Bank, FactSet, Baker Hughes-GE rig data. Note: Market data as of May 20, 2019.

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U.S Drilling Services

2 2 4 2 1 3 1 1 1

Light Bay Deep Bay Deep Posted High-Spec Posted

Competitor B Competitor A Parker

Barge Rig Diversity 4

• Leverage resources and experience to

expand O&M business (i.e. California & GOM offshore)

• Dominant market share in GOM inland

waters with only fleet capable of drilling all projects

• Parker-owned rigs breakeven gross

margin3 projected at approx. 30% utilization Unique Operating Strengths

1 LTM as of 1Q’19 2 Excluding reimbursables 3 Excluding depreciation and amortization 4 Rigs classes are defined as follows:

• Light Bay: Drawworks rating < 1500hp with bay barge design
• Deep Bay: Drawworks rating > 1500hp with 2 mud pumps with bay barge design
• Deep Posted : Drawworks rating > 1500hp with 2 mud pumps with posted barge design
• High-Spec Posted: Drawworks rating > 3000hp with 3 mud pump 7500psi system and posted barge design

90% 10% 60% 40%

Parker Owned Rigs O&M + Project Services

Drilling Revenues 2 by Service Type

Parker Owned Rigs O&M + Project Services

2014 Current1

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Continuing to progress in 2019…

US Drilling

• Intl. / AK

Drilling

Executed O&M drilling contract with Husky Energy for their new platform project offshore Atlantic Canada Opening new U.S. Rental Tools facility in Odessa, TX Completed rig reactivation phase on offshore California O&M project Extended tubular running services contract for an additional 3 years with key client in Abu Dhabi

Intl. Rentals US Rentals

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Q1 2019 Financial Snapshot

1 Adjusted EBITDA is a non-GAAP financial measure. Please refer to the appendix for the definition and reconciliation. 2 Represents unrestricted ending cash balance 3 Our $50M credit facility is reduced by $15M of restricted liquidity and $10M in letters of credit, which equates to an availability of $25M

7 ½ %

$ millions

128 25

Cash 2 ABL 3

Liquidity Position Q1 CAPEX Spend

82% 18%

Rentals Drilling

($ millions)

03/31/2019 Ending Cash Balance 2 ABL Borrowing Long Term Debt 128 210 Revenue Net Income (loss)

• Adj. EBITDA 1
• Adj. EBITDA / Rev (%)

157 28 18% (90)

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1 LTM as of 1Q’19 2 Adjusted EBITDA and Net Debt are non-GAAP financial measures. Please refer to the appendix for definitions and reconciliations. 3 Peer data set is mean calculation of companies WFT, NBR, SPN, HP, PD, PTEN, BAS, KEG, and PES 4 Company’s revolver remains undrawn

$210 $50 2019 2020 2021 2022 2023 2024

Debt Maturity Schedule

$ millions

Debt / Adj. EBITDA 2 Net Debt 2 / Adj. EBITDA 2 Debt / Total Cap.

• Adj. EBITDA 2 / Interest

2.2x 0.9x

($ millions)

Parker

Key Leverage Metrics 1

Peers 3 3.0x 40% 5.8x 5.1x 80% 6.9x

ABL 4

Term Loan

Q1 2019 Financial Snapshot

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Nick Henley Investor Relations Director +1 281-406-2082 Nick.Henley@parkerdrilling.com www.parkerdrilling.com

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Reconciliation of Adjusted EBITDA to Net Income (loss)

1 We believe Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results

from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), remeasurement of foreign currency transactions, tax consequences, impairment and other special items. Special items include items impacting operating expenses that management believes detract from an understanding of normal operating performance. Management uses Adjusted EBITDA as a supplemental measure to review current period operating performance and period to period

• comparisons. Our Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner. EBITDA

and Adjusted EBITDA are not measures of financial performance under U.S. Generally Accepted Accounting Principles (GAAP), and should not be considered in isolation or as an alternative to operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.

$ in millions

LTM FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Net income (loss) (227) (166) (119) (231) (95) 23 Interest expense 32 43 44 46 45 44 Income tax expense (benefit) 6 7 10 74 23 24 Depreciation and amortization 104 108 122 140 156 145 EBITDA (85) (8) 57 29 129 236 Adjustments: Loss on impairment 51 51

• Provision for reduction in carrying value of certain assets
• 2
• 12
• (Gain) loss on disposition of assets, net

2 2 2 1 (2) (1)

Pre-petition restructuring charges

22 22

• Reorganization items

103 9

• Interest income

(0) (0) (0) (0) (0) (0) Other 2 2 (0) (0) 10 28 Special items

• 3

1 1

• Non-routine items
• (3)

Adjusted EBITDA 1

95 78 64 31 150 260 G&A 26 25 26 34 36 35

Adjusted EBITDA excluding G&A

121 103 90 65 186 295

Parker Drilling Company and Subsidiaries

• Adj. EBITDA and Adj. EBITDA excluding G&A

(Unaudited)

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Reconciliation of Net Debt to Total Debt

1 Net debt is computed by subtracting the sum of cash & cash equivalents from total debt. This non-GAAP measure has limitations and therefore should not be used in isolation or as a

substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of the consolidated Company based on several criteria, including net debt, because it believes that this financial measure accurately measures the Company’s liquidity. In addition, securities analysts and investors use this measure as one of the metrics on which they analyze the company’s performance. Other companies in this industry may compute this measure differently.

$ in millions

March 31, 2019 Long Term Debt $210 Current Debt Total Debt $210 Cash & Cash Equivalents 128 Net Debt 1 $82

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Parker Drilling Services

• O&M requires skills that

enable the drilling contractor to run unique equipment under special circumstances Operations & Management Daywork Drilling Services

Drilling Services

Unique Capability Cost Efficiency Risk Management

• Development requires

processes & procedures which maximize efficiency & minimizes clients cost per BOE

• Exploration requires the

drilling contractor to provide contingency equipment & skilled multifaceted personnel

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Parker Rental & Services

• Impact and Stabilization
• Hole Openers , Reamers
• ROP enhancers, Motors

Well Construction Well Intervention Surface & Tubular Rental & Services

• Cased & Open Hole
• P&A
• Through Tubing

Tubular Running Services Re-entry Services Machines Shops BHA Tools Rental Fishing & Remedial PCE & Tubular Rental

• Conventional TRS
• CRT – 2M-TEK
• Hydro-Mechanical

Whipstocks

• Fabrication & Repair
• Inspection
• BOPs
• Drill Pipe, HWDP
• Drill Collar

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Parker Drilling History

For over 85 years, the Parker Drilling team has provided premier drilling and rental tools products and services in some of the world’s most remote and challenging environments.; Parker Drilling has engineered a history of record setting, pioneering the way for new innovative, reliable, and efficient ways of drilling for more than 80 years

1934: Parker Drilling founded in Oklahoma 1969: Parker enters Alaska 1980: Parker becomes first U.S. drilling contractor to provide specialized services and drilling expertise to China 1999: Parker exits the U.S. land drilling market 2007: Parker named

• ne of

America’s Safest Companies for 2007 by Occupational Hazards magazine 2013: Parker named “Drilling Contractor

• f the Year” by

Exxon Neftegas, Ltd. 2016: Parker enters Canadian Offshore Market 1945: Company enters the international drilling market with first rigs working in Venezuela and Canada 1991: Parker becomes the first Western drilling company to work in the Siberian Arctic 2009: Parker celebrates 75th year of

• perations

and opens Anchorage, Alaska Regional Office 2014: Parker celebrates 80th year of

• perations

1967: Parker patents Heli-Hoist rig design, opening new international and arctic frontiers 1972: Company sets drilling depth record – 28,500 ft at Ralph Lowe Estate, TX 1991: Company introduces new era of arctic drilling technology with an innovative, powerful and self-propelled rig 1999: Parker designs and constructs world’s first and

• nly arctic-class

drilling barge, the Sunkar, to explore the Caspian Sea 2002: Company designs, constructs and

• perates

“Yastreb”, the world’s most technologically advanced ERD land rig, for the Sakhalin-1 Project in Russia 2011: Total measured depth of 12,345 meters 2015: Parker acquires 2M-Tek and commercializes Top Tek Tool (Automated Casing Running Tool)

1934 1945 1969 1980 1991 1999 2007 2009 2012 2014 2015 1967 1972 2002 2008 2011 2013 2016

2008: Company breaks ERD record at Sakhalin Island, reaching out

• ver seven miles

under the sea floor with “Yastreb” 2012: Total measured depth of 12,450 meters 2013: Total measured depth of 12,700 meters Yastreb Rig sets new world records for extended-reach drilling with the world's longest well from Sakhalin Island, Russia.