Parker aims to sell rigs after first deal falls apart; $200 million will go toward debt

Petroleum News Houston staff

Parker Drilling, after its first deal fell apart, said it will try again to sell rigs and use the anticipated $200 million in proceeds to help retire debt and put the struggling company on sounder financial footing.

Parker said in an Aug. 4 conference call that it had hoped to cinch a deal Aug. 1, but opted to withdraw when the unidentified would-be buyer requested “a material change in terms.” The package included 16 land rigs in Latin America and seven jackup and four platform rigs in the Gulf of Mexico.

Parker said it has since opened discussions with other potential buyers, adding that the assets likely would be sold in pieces rather than a single package. And that could take until the end of the year or longer, the company indicated.

In addition to the 27 rigs identified for sale, other assets could be put on the auction block, Parker said. But the company stressed that it was “not entertaining a bid for the whole company.”

Parker said reducing its $571-million debt is still the primary goal. The company has said it wants to cut its debt to 50 to 55 percent of market capitalization from a lofty 67 percent. In addition to using proceeds from asset sales, Parker said it plans to raise additional funds through capital markets and to restructure its debt schedule and to secure a new bank credit facility.

Parker has been suffering from low rig utilization. In the 2003 second quarter, the company reported a loss of $74.4 million or 80 cents per share, compared to a loss of $11.5 million or 12 cents per share for the same period last year. However, the 2003 second-quarter loss included the assets Parker had hoped to sell. They were reclassified as discontinued operations and reflect a loss of $60.7 million, of which $54 million was a non-cash impairment, the company said.

Parker said it would now concentrate on international oil and gas markets, in particular the Commonwealth of Independent States, the Middle East and the Far East. The company announced that it was awarded a three-year contract for two land rigs in Turkmenistan.