================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Transcription

1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washingtn, D.C FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Fr The Quarterly Perid Ended MARCH 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Fr the transitin perid frm t Cmmissin File Number PARKER DRILLING COMPANY (Exact name f registrant as specified in its charter) Delaware (State r ther jurisdictin f (I.R.S. Emplyer Identificatin N.) incrpratin r rganizatin) 1401 Enclave Parkway, Suite 600, Hustn, Texas (Address f principal executive ffices) (Zip cde) (281) (Registrant's telephne number, including area cde) Indicate by check mark whether the registrant (1) has filed all reprts required t be filed by Sectin 13 r 15(d) f the Securities Exchange Act f 1934 during the preceding 12 mnths (r fr such shrter perid that the registrant was required t file such reprts), and (2) has been subject t such filing requirements fr the past 90 days. Yes [X] N [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 f the Exchange Act). Yes [X] N [ ] As f April 29, 2005, 95,736,265 cmmn shares were utstanding. ================================================================================

2 PARKER DRILLING COMPANY INDEX <TABLE> <CAPTION> Page N <S> <C> <C> Part I. Financial Infrmatin Item 1. Financial Statements 2 Cnslidated Cndensed Balance Sheets (Unaudited) March 31, 2005 and December 31, Cnslidated Cndensed Statements f Operatins (Unaudited) Three Mnths Ended March 31, 2005 and Cnslidated Cndensed Statements f Cash Flws (Unaudited) Three Mnths Ended March 31, 2005 and Ntes t the Unaudited Cnslidated Cndensed Financial Statements 5-16 Reprt f Independent Registered Public Accunting Firm 17 Item 2. Management's Discussin and Analysis f Financial Cnditin and Results f Operatins 18 Item 3. Quantitative and Qualitative Disclsures abut Market Risk 26 Item 4. Cntrls and Prcedures 26 Part II. Other Infrmatin 27 Item 1. Legal Prceedings 27 Item 2. Changes in Securities, Use f Prceeds and Issuer Purchases f Equity Securities 27 Item 3. Defaults Upn Senir Securities 27 Item 4. Submissin f Matters t a Vte f Security Hlders 27 Item 5. Other Infrmatin 28 Item 6. Exhibits 28 Signatures 29 Officer Certificatins 1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dllars in Thusands) (Unaudited) <Table> <Captin>

3 March 31, December 31, <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 66,265 $ 44,267 Accunts and ntes receivable, net 104,545 99,315 Rig materials and supplies 20,210 19,206 Deferred csts 11,297 13,546 Other current assets 12,572 9,818 Ttal current assets 214, ,152 Prperty, plant and equipment less accumulated depreciatin and amrtizatin f $618,232 at March 31, 2005 and $610,485 at December 31, , ,824 Assets held fr sale 2,322 23,665 Gdwill 107, ,606 Other nncurrent assets 24,207 26,343 Ttal assets $ 726,481 $ 726,590 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current prtin f lng-term debt $ - $ 24 Accunts payable and accrued liabilities 93,155 72,625 Accrued incme taxes 15,891 14,704 Ttal current liabilities 109,046 87,353 Lng-term debt 455, ,039 Other lng-term liabilities 6,013 9,281 Cntingency (Nte 8) - - Stckhlders' equity: Cmmn stck 15,942 15,833 Capital in excess f par value 443, ,085 Unamrtized restricted stck plan cmpensatin (350) (718) Accumulated deficit (303,354) (307,283) Ttal stckhlders' equity 155, ,917 Ttal liabilities and stckhlders' equity $ 726,481 $ 726,590 ============ ============ </TABLE> See accmpanying ntes t the unaudited cnslidated cndensed financial statements. 2 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dllars in Thusands Except Per Share and Weighted Average Shares Outstanding) (Unaudited) <Table> <Captin> Three Mnths Ended March 31,

4 <S> <C> <C> Drilling and rental revenues: U.S. drilling $ 27,117 $ 19,759 Internatinal drilling 72,172 56,037 Rental tls 20,954 15,103 Ttal drilling and rental revenues 120,243 90,899 Drilling and rental perating expenses: U.S. drilling 14,388 12,691 Internatinal drilling 55,803 39,891 Rental tls 8,185 6,613 Depreciatin and amrtizatin 16,876 16,249 Ttal drilling and rental perating expenses 95,252 75,444 Drilling and rental perating incme 24,991 15,455 General and administratin expense (6,976) (6,042) Gain n dispsitin f assets, net Ttal perating incme 18,567 10,136 Other incme and (expense): Interest expense (11,056) (13,407) Changes in fair value f derivative psitins 1,607 - Interest incme Lss n extinguishment f debt (1,429) (316) Minrity interest 769 (290) Other (6) 83 Ttal ther incme and (expense) (9,877) (13,681) Incme (lss) befre incme taxes 8,690 (3,545) Incme tax expense 4,852 4,049 Incme (lss) frm cntinuing peratins 3,838 (7,594) Discntinued peratins 91 2,730 Net incme (lss) $ 3,929 $ (4,864) ============ ============ Basic earnings (lss) per share: Incme (lss) frm cntinuing peratins $ 0.04 $ (0.08) Discntinued peratins $ - $ 0.03 Net incme (lss) $ 0.04 $ (0.05) Diluted earnings (lss) per share: Incme (lss) frm cntinuing peratins $ 0.04 $ (0.08) Discntinued peratins $ - $ 0.03 Net incme (lss) $ 0.04 $ (0.05) Number f cmmn shares used in cmputing earnings per share: Basic 94,948,637 93,594,900 Diluted 96,145,661 93,594,900 See accmpanying ntes t the unaudited cnslidated cndensed financial statements. </TABLE> 3 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dllars in Thusands) (Unaudited)

5 <Table> <Captin> Three Mnths Ended March 31, <S> <C> <C> Cash flws frm perating activities: Net incme (lss) $ 3,929 $ (4,864) Adjustments t recncile net incme (lss) t net cash prvided by (used in) perating activities: Depreciatin and amrtizatin 16,876 16,249 Gain n dispsitin f assets (552) (723) Expenses nt requiring cash 1,523 2,197 Discntinued peratins 14 (879) Change in perating assets and liabilities 12,893 8,687 Net cash prvided by perating activities 34,683 20,667 Cash flws frm investing activities: Capital expenditures (12,606) (5,323) Prceeds frm the sale f assets 22,991 1,310 Prceeds frm insurance settlement - 24,300 Net cash prvided by investing activities 10,385 20,287 Cash flws frm financing activities: Principal payments under debt bligatins (25,024) (15,423) Prceeds frm stck ptins exercised 1, Net cash used in financing activities (23,070) (15,173) Net increase in cash and cash equivalents 21,998 25,781 Cash and cash equivalents at beginning f year 44,267 67,765 Cash and cash equivalents at end f perid $ 66,265 $ 93,546 ============ ============ Supplemental cash flw infrmatin: Interest paid $ 3,258 $ 4,402 Incme taxes paid $ 2,899 $ 1,607 Supplemental nncash investing activity: Net unrealized lss n investments available fr sale $ - $ (156) </TABLE> See accmpanying ntes t the unaudited cnslidated cndensed financial statements. 4 PARKER DRILLING COMPANY AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. General - In the pinin f the management f Parker Drilling Cmpany (the "Cmpany"), the accmpanying unaudited cnslidated cndensed financial statements reflect all adjustments (f a nrmally recurring nature) which are necessary fr a fair presentatin f (1) the financial psitin as f March 31, 2005 and December 31, 2004, (2) the results f peratins fr the three mnths ended March 31, 2005 and 2004, and (3) cash flws fr the three mnths ended March 31, 2005 and Results fr the three mnths ended March 31, 2005 are nt necessarily indicative f the results that

6 will be realized fr the year ending December 31, The financial statements shuld be read in cnjunctin with ur Frm 10-K fr the year ended December 31, Our independent registered public accunting firm has perfrmed a review f these interim financial statements in accrdance with standards established by the Public Cmpany Accunting Oversight Bard (United States). Pursuant t Rule 436(c) under the Securities Act f 1933, their independent registered public accunting firm's reprt f that review shuld nt be cnsidered a reprt within the meaning f Sectin 7 and 11 f that Act, and the independent registered public accunting firm's liability under Sectin 11 des nt extend t it. Stck-Based Cmpensatin - Our stck-based emplyee cmpensatin plans are accunted fr under the recgnitin and measurement principles f the Accunting Principles Bard Opinin ("APB") N. 25, "Accunting fr Stck Issued t Emplyees," and related Interpretatins. N stck-based emplyee cmpensatin cst related t stck ptins granted is reflected in net incme (lss), as all ptins granted under the plan had an exercise price equal t r greater than the fair market value f the underlying cmmn stck n the date f grant. The fllwing table illustrates the effect n net incme (lss) and net incme (lss) per share if we had applied the fair value recgnitin prvisins f the Statement f Financial Accunting Standards ("SFAS") N. 123, "Accunting fr Stck-Based Cmpensatin," t stck-based emplyee cmpensatin. In December 2004, the Financial Accunting Standards Bard ("FASB") revised SFAS N. 123 t eliminate the alternative under the riginal statement t accunt fr share-based emplyee cmpensatin using APB Opinin N. 25 and set the effective date fr interim perids beginning after June 15, In April 2005, the Securities and Exchange Cmmissin ("SEC") apprved a new rule fr public cmpanies that defers the effective date f SFAS N. 123R t annual perids beginning after June 15, We plan t adpt the prvisins f the Statement n January 1, 2006 using the mdified prspective methd. <Table> <Captin> Three Mnths Ended March 31, (Dllars in Thusands, Except Per Share Amunts) <S> <C> <C> Net incme (lss) as reprted $ 3,929 $ (4,864) Stck-based cmpensatin expense included in net incme (lss) as reprted Stck-based cmpensatin expense determined under fair value methd, net f tax (956) (1,236) Net incme (lss) pr frma $ 3,849 $ (5,121) ==================== ==================== Basic and diluted lss per share: Net incme (lss) as reprted $ 0.04 $ (0.05) Net incme (lss) pr frma $ 0.04 $ (0.05) Expected vlatility 51.1% March 31, 2005 Expected vlatility 59.1% March 31, 2004 Risk free rate 3.38% in 2005 Risk free rate 2.74% in 2004 The fair value f each ptin grant is estimated n the date f grant using the Black-Schles ptin pricing mdel with the weighted-average assumptins nted abve fr the three mnths ended March 31, 2005 and We assume n dividend yield and that the expected lives f the ptins range frm three t seven years.

7 5 NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (cntinued) 2. Earnings Per Share ("EPS") <Table> <Captin> Fr the Three Mnths Ended March 31, Incme Shares Per-Share (Numeratr) (Denminatr) Amunt <S> <C> <C> <C> Basic EPS: Incme frm cntinuing peratins $ 3,838,000 94,948,637 $ 0.04 Discntinued peratins 91, Net incme $ 3,929,000 $ 0.04 =============== =============== Effect f dilutive securities: Stck ptins - 1,197,024 - Diluted EPS: Incme frm cntinuing peratins $ 3,838,000 96,145,661 $ 0.04 Discntinued peratins 91, Net incme $ 3,929,000 $ 0.04 =============== =============== </TABLE> <TABLE> <CAPTION> Fr the Three Mnths Ended March 31, Incme (Lss) Shares Per-Share (Numeratr) (Denminatr) Amunt <S> <C> <C> <C> Basic EPS: Lss frm cntinuing peratins $ (7,594,000) 93,594,900 $ (0.08) Discntinued peratins 2,730, Net lss $ (4,864,000) $ (0.05) =============== =============== Diluted EPS: Lss frm cntinuing peratins $ (7,594,000) 93,594,900 $ (0.08) Discntinued peratins 2,730, Net lss $ (4,864,000) $ (0.05) =============== =============== Optins t purchase 4,285,300 shares f cmmn stck with exercise prices ranging frm $5.35 t $12.19 per share, were utstanding during the three mnths ended March 31, 2005, but were nt included in the cmputatin f diluted EPS because the ptins' exercise prices were greater than the average market price f the cmmn shares. Fr the three mnths ended March 31, 2004, ptins t purchase 9,866,091 shares f cmmn stck at prices ranging frm $1.96 t $12.19 per share were utstanding but nt included in the cmputatin f diluted EPS because the assumed exercise f the ptins wuld have had an anti-dilutive effect n EPS due t the net lss incurred during the perid. As f March 31, 2004, we had utstanding $94,669,000 f 5.5% Cnvertible Subrdinated Ntes which were cnvertible int 6,151,332 shares f cmmn stck at $15.39 per share. The ntes were utstanding since their issuance in July 1997 but were nt included in the cmputatin f diluted EPS because the assumed cnversin f the ntes wuld have had an anti-dilutive effect n EPS. The 5.5% Cnvertible Subrdinated Ntes were paid ff n August 2, 2004.

8 6 NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (cntinued) 3. Business Segments - The primary services we prvide are as fllws: U.S. drilling, internatinal drilling and rental tls. Infrmatin regarding ur peratins by industry segment fr the three mnths ended March 31, 2005 and 2004 is as fllws: <Table> <Captin> Three Mnths Ended March 31, (Dllars in Thusands) <S> <C> <C> Drilling and rental revenues: U.S. drilling $ 27,117 $ 19,759 Internatinal drilling 72,172 56,037 Rental tls 20,954 15, Ttal drilling and rental revenues $ 120,243 $ 90,899 =============== =============== Drilling and rental perating incme: U.S. drilling $ 8,093 $ 2,312 Internatinal drilling 7,882 8,144 Rental tls 9,016 4, Ttal drilling and rental perating incme 24,991 15,455 General and administrative expense (6,976) (6,042) Gain n dispsitin f assets, net Ttal perating incme 18,567 10,136 Interest expense (11,056) (13,407) Changes in fair value f derivative psitins 1,607 - Lss n extinguishment f debt (1,429) (316) Other 1, Incme (lss) befre incme taxes $ 8,690 $ (3,545) =============== =============== 4. Discntinued Operatins - Discntinued peratins in the first quarter f 2004 include results f peratins fr U.S. Gulf f Mexic ffshre assets cnsisting f seven jackup rigs and fur platfrm rigs. Under a plan apprved by ur bard f directrs in June 2003, nine f the rigs were sld in the third quarter f 2004 and ne was sld in January Jackup rig 14 was damaged in September 2003 when it malfunctined and became partially submerged. We received a ttal lss settlement f $27.0 millin, f which $24.3 millin was received in March The remaining $2.7 millin was received in April The cst incurred t tw the rig t the prt and pay fr the damage assessment apprximated $4.0 millin resulting in net insurance prceeds f apprximately $23.0 millin. The net bk value f jackup rig 14 was $17.7 millin at March 31, In cmpliance with Generally Accepted Accunting Principles ("GAAP"), we were required t recgnize the gain n insurance prceeds in excess f the net bk value f the asset. When cnsidered separately frm the ther U.S. Gulf f Mexic ffshre dispsal grup, this resulted in a gain f apprximately $5.3 millin frm the damage t the rig. After cnsidering the impact f the gain, we determined that the verall valuatin f the U.S. Gulf f Mexic ffshre grup was unchanged frm the fair value assessment at June 30, As a result, we recgnized an additinal impairment f $5.3 millin which, alng with the gain, was reprted in discntinued peratins during the first quarter f The three mnths ended March 31, 2005, include the peratins f the last

9 jackup rig prir t its sale n January 3, NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (cntinued) Analysis f Discntinued Operatins <Table> <Captin> Three Mnths Ended March 31, (Dllars in Thusands) <S> <C> <C> U.S. jackup and platfrm drilling revenues $ 193 $ 12,399 =============== =============== Incme frm discntinued peratins $ 91 $ 2,730 =============== =============== 5. Incme Tax Expense - Incme tax expense frm peratins cnsists f $4.9 millin freign tax expense fr the first quarter f 2005, as cmpared t freign tax expense f $4.0 millin fr the first quarter f The $0.9 millin increase was primarily due t peratins in Mexic which began in July 2004, ffset by decreased taxes in Nigeria and Kazakhstan. Fr the first quarter f 2005, we reprted net incme and fr the first quarter f 2004, we reprted a net lss. Hwever, n additinal deferred tax benefit was recgnized since the sum f ur deferred tax assets, principally the net perating lss carryfrwards, exceeds the deferred tax liabilities, principally the excess f tax depreciatin ver bk depreciatin. 6. Lng-Term Debt <Table> <Captin> March 31, 2005 December 31, (Dllars in Thusands) <S> <C> <C> Senir Ntes: Interest rate %, due 2009 $ 130,951 $ 156,039 Interest rate flating (LIBOR %), due , ,000 Interest rate 9.625%, due , ,000 Capital Lease Ttal debt 455, ,063 Less current prtin Ttal lng-term debt $ 455,951 $ 481,039 ================== ================== On February 7, 2005, we retired an additinal $25.0 millin face value f ur % Senir Ntes pursuant t a redemptin ntice dated January 6, 2005 at the redemptin price f percent. Prceeds frm the sale f jackup rig 25 and cash n hand were used t fund the redemptin. Our current $40.0 millin credit facility is available fr general crprate purpses and t fund reimbursement bligatins f letters f credit the banks issue n ur behalf pursuant t the terms f the credit facility. Availability under the revlving credit facility is subject t a brrwing base limitatin f 85 percent f eligible receivables plus a value fr eligible rental tls equipment. The credit facility calls fr a brrwing base calculatin nly when the credit facility has utstanding lans r letters f credit ttaling at least $25.0 millin. As f March 31, 2005, there were $10.3 millin letters f credit utstanding and n lans.

10 On April 21, 2005, we issued an additinal $50.0 millin in aggregate principal amunt f ur 9.625% Senir Ntes due 2013 at a premium. The ffering price f 111 percent f the principal amunt resulted in grss prceeds f $55.5 millin. The additinal ntes were issued under an indenture, dated as f Octber 10, 2003, under which $175.0 millin in aggregate principal amunt f ntes f the same series were previusly issued. On April 21, 2005, we issued a redemptin ntice t retire $65.0 millin f ur % Senir Ntes at the redemptin price f percent. The redemptin will clse n May 21, 2005 and will be funded by the net prceeds f the $50.0 millin additinal 9.625% Senir Ntes and cash n hand. 8 NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (cntinued) 7. Derivative Instruments - We use derivative instruments t manage risks assciated with interest rate fluctuatins in cnnectin with ur $150.0 millin Senir Flating Rate Ntes. Derivative instruments, which cnsist f variable-t-fixed interest rate swaps, d nt meet the hedge criteria in SFAS N. 133, "Accunting fr Derivative Instruments and Hedging Activities," and are therefre nt designated as hedges. Accrdingly, the change in the fair value f the interest rate swaps is recgnized currently in earnings. As f March 31, 2005, we had the fllwing derivative instruments utstanding related t ur interest rate swaps, which are included in "Other nncurrent assets": <Table> <Captin> Swap Effective Terminatin Ntinal Flating Fixed Fair Agreement Date Date Amunt Rate Rate Value (Dllars in Thusands) <S> <C> <C> <C> <C> <C> <C> 1 September 1, 2005 September 2, 2008 $ 50,000 Three-mnth LIBOR 8.83% $ 332 plus 475 basis pints 1 September 1, 2005 September 4, 2007 $ 50,000 Three-mnth LIBOR 8.48% 480 plus 475 basis pints $ 812 ===== 8. Cntingency - As previusly reprted, the Kazakhstan branch ("PKD Kazakhstan") f Parker Drilling Cmpany Internatinal Limited ("PDCIL") prevailed n its appeal arising ut f an audit assessment f apprximately $29.0 millin by the Ministry f State Revenues f Kazakhstan ("MSR") based n payments PDCIL received frm the peratr t upgrade barge rig 257. The MSR did nt appeal this ruling within the time required fr a supervisry appeal, but in February 2005 filed an applicatin fr re-hearing based n new evidence. PKD Kazakhstan has filed an bjectin t this applicatin fr rehearing. The Supreme Curt f Kazakhstan issued an rder n April 12, 2005, declining the Ministry f Finance f Kazakhstan's ("MinFin") applicatin fr re-hearing. In a related matter, based n its interpretatin f the initial ruling f the Kazakhstan Supreme Curt, MinFin made a claim n March 10, 2003 fr crprate incme taxes based primarily n the disallwance f depreciatin f the full value f barge rig 257 in the incme tax returns f PKD Kazakhstan fr the years PKD Kazakhstan instituted legal prceedings t challenge the validity f these claims by MinFin, which ultimately resulted in the Supreme Curt cnfirming the decisin f the Astana City Curt, which earlier had ruled that apprximately $7.7 millin f the claims f MinFin all f which have been expensed in prir perids are valid and payable upn receipt f the re-issuance f the crrected

11 ntice frm the relevant taxing authrity. MinFin has nt issued a crrected ntice; hwever, PKD Kazakhstan's available credits were reduced by apprximately $7.1 millin leaving a remaining balance due f $0.6 millin. While the Supreme Curt disallwed depreciatin fr the years , the judgment des allw PKD Kazakhstan t depreciate the full value f barge rig 257 n its tax returns beginning in 2002, which will reduce taxable incme and taxes t be paid in the future. We cntinue t pursue ur petitin with the U.S. Treasury Department fr Cmpetent Authrity review, which is a tax treaty prcedure t reslve disputes as t which cuntry may tax incme cvered under the treaty. The U.S. Treasury Department has granted ur petitin and has initiated prceedings with the MSR which are nging. 9 NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (cntinued) 9. Subsequent Event - On May 6, 2005 we entered int definitive agreements with affiliates f Saxn Energy Services, Inc. ("Saxn") t sell ur seven remaining land rigs and related assets in Clmbia and Peru. The ttal purchase price is $34 millin. One f the agreements clsed simultaneusly with the executin f the definitive agreement, resulting in receipt f apprximately $4 millin. We anticipate clsing the remaining transactins within the next 30 days, subject t btaining cntractual related cnsents and varius third party apprvals. Prceeds frm the sale will be used t retire debt. 10. Parent, Guarantr, Nn-Guarantr Unaudited Cnslidating Cndensed Financial Statements - Set frth n the fllwing pages are the unaudited cnslidating cndensed financial statements f (i) Parker Drilling, (ii) ur restricted subsidiaries that are guarantrs f the Senir Ntes and (iii) ur restricted and unrestricted subsidiaries that are nt guarantrs f the Senir Ntes. All f ur Senir Ntes are guaranteed by substantially all f the restricted subsidiaries f Parker Drilling. There are currently n restrictins n the ability f the restricted subsidiaries t transfer funds t Parker Drilling in the frm f cash dividends, lans r advances. Parker Drilling is a hlding cmpany with n peratins, ther than thrugh its subsidiaries. AralParker (a Kazakhstan clsed jint stck cmpany, wned 50 percent by Parker Drilling (Kazakstan) Ltd. and 50 percent by Aralnedra, CJSC), Casuarina Limited (a whlly-wned captive insurance cmpany), KDN Drilling Limited, Mallard Drilling f Suth America, Inc., Mallard Drilling f Venezuela, Inc., Parker Drilling Investment Cmpany, Parker Drilling (Nigeria), Limited, Parker Drilling Cmpany (Blivia) S.A., Parker Drilling Cmpany Kuwait Limited, Parker Drilling Cmpany Limited (Bahamas), Parker Drilling Cmpany f New Zealand Limited, Parker Drilling Cmpany f Sakhalin, Parker Drilling de Mexic S. de R.L. de C.V., Parker Drilling Internatinal f New Zealand Limited, Parker Drilling Tengiz, Ltd., Parker TNK, PD Servicis Integrales, S. de R.L. de C.V., PKD Sales Crpratin, Parker SMNG Drilling Limited Liability Cmpany (wned 50 percent by Parker Drilling Cmpany Internatinal, Inc.) and Universal Rig Leasing B.V. are all nn-guarantr subsidiaries. We are prviding unaudited cnslidating cndensed financial infrmatin f the parent, Parker Drilling, the guarantr subsidiaries, and the nn-guarantr subsidiaries as f March 31, 2005 and December 31, 2004 and fr the three mnths ended March 31, 2005 and The cndensed cnslidating financial statements present investments in bth cnslidated and uncnslidated subsidiaries using the equity methd f accunting. 10 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATING CONDENSED BALANCE SHEET (Dllars in Thusands) <TABLE>

12 <CAPTION> March 31, Parent Guarantr Nn-Guarantr Eliminatins Cnslidated <S> <C> <C> <C> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 39,804 $ 7,305 $ 19,156 $ - $ 66,265 Accunts and ntes receivable, net 178, ,487 39,309 (218,324) 104,545 Rig materials and supplies - 15,440 4,770-20,210 Deferred csts - 5,010 6,287-11,297 Other current assets 3,725 8, ,572 Ttal current assets 221, ,557 69,954 (218,224) 214,889 Prperty, plant and equipment, net ,178 37,659 (70,514) 377,457 Assets held fr sale - 1, ,322 Gdwill - 107, ,606 Investment in subsidiaries and intercmpany advances 453, ,016 34,382 (1,307,656) - Other nncurrent assets 14,004 9, (39) 24,207 Ttal assets $ 688,998 $ 1,490,427 $ 143,489 $(1,596,433) $ 726,481 =========== =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accunts payable and accrued liabilities $ 43,366 $ 235,785 $ 44,677 $ (230,673) $ 93,155 Accrued incme taxes 1,306 13,362 1,223-15,891 Ttal current liabilities 44, ,147 45,900 (230,673) 109,046 Lng-term debt 455, ,951 Other lng-term liabilities (41,679) 47, ,013 Intercmpany payables 74, ,674 27,598 (695,855) - Stckhlders' equity: Cmmn stck 15,942 39,899 21,251 (61,150) 15,942 Capital in excess f par value 443, ,562 33,783 (1,011,345) 443,233 Unamrtized restricted stck plan cmpensatin (350) (350) Retained earnings (accumulated deficit) (303,354) (417,513) 14, ,590 (303,354) Ttal stckhlders' equity 155, ,948 69,957 (669,905) 155,471 Ttal liabilities and stckhlders' equity $ 688,998 $ 1,490,427 $ 143,489 $(1,596,433) $ 726,481 =========== =========== =========== =========== =========== 11 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATING CONDENSED BALANCE SHEET (Dllars in Thusands) <TABLE> <CAPTION> December 31, Parent Guarantr Nn-Guarantr Eliminatins Cnslidated <S> <C> <C> <C> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 16,677 $ 7,938 $ 19,652 $ - $ 44,267 Accunts and ntes receivable, net 176, ,445 38,213 (216,891) 99,315 Rig materials and supplies - 13,593 5,613-19,206

13 Deferred csts - 5,266 8,280-13,546 Other current assets 3,894 4, ,818 Ttal current assets 197, ,127 72,708 (216,802) 186,152 Prperty, plant and equipment, net ,027 38,177 (70,514) 382,824 Assets held fr sale - 22, ,665 Gdwill - 107, ,606 Investment in subsidiaries and intercmpany advances 489, ,475 35,422 (1,296,040) - Other nncurrent assets 14,005 11,007 1,331-26,343 Ttal assets $ 700,401 $ 1,461,194 $ 148,351 $(1,583,356) $ 726,590 =========== =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current prtin f lng-term debt $ 24 $ - $ - $ - $ 24 Accunts payable and accrued liabilities 34, ,852 42,156 (220,155) 72,625 Accrued incme taxes 1,677 12, ,704 Ttal current liabilities 36, ,578 42,457 (220,155) 87,353 Lng-term debt 481, ,039 Other lng-term liabilities (40,611) 48,578 1, ,281 Intercmpany payables 74, ,674 29,695 (697,952) - Stckhlders' equity: Cmmn stck 15,833 39,899 21,251 (61,150) 15,833 Capital in excess f par value 441, ,563 33,783 (1,011,346) 441,085 Unamrtized restricted stck plan cmpensatin (718) (718) Retained earnings (accumulated deficit) (307,283) (427,098) 19, ,208 (307,283) Ttal stckhlders' equity 148, ,364 74,924 (665,288) 148,917 Ttal liabilities and stckhlders' equity $ 700,401 $ 1,461,194 $ 148,351 $(1,583,356) $ 726,590 =========== =========== =========== =========== =========== 12 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS (Dllars in Thusands) <TABLE> <CAPTION> Three Mnths Ended March 31, Parent Guarantr Nn-Guarantr Eliminatins Cnslidated <S> <C> <C> <C> <C> <C> Drilling and rental revenues $ - $ 89,144 $ 34,943 $ (3,844) $ 120,243 Drilling and rental perating expenses - 47,908 34,323 (3,855) 78,376 Depreciatin and amrtizatin - 15, ,876 Drilling and rental perating incme (lss) - 25,325 (345) 11 24,991 General and administratin expense(1) (42) (6,934) - - (6,976) Gain n dispsitin f assets, net Ttal perating incme (lss) (42) 18,738 (140) 11 18,567

14 Other incme and (expense): Interest expense (12,248) (12,287) (755) 14,234 (11,056) Changes in fair value f derivative psitins 1, ,607 Interest incme 11,639 2, (14,234) 238 Lss n extinguishment f debt (1,429) (1,429) Minrity interest Other - (6) 11 (11) (6) Equity in net earnings f subsidiaries 4, (4,608) - Ttal ther incme and (expense) 4,177 (10,170) 735 (4,619) (9,877) Incme (lss) befre incme taxes 4,135 8, (4,608) 8,690 Incme tax expense 206 2,831 1,815-4,852 Incme (lss) frm cntinuing peratins 3,929 5,737 (1,220) (4,608) 3,838 Discntinued peratins Net incme (lss) $ 3,929 $ 5,828 $ (1,220) $ (4,608) $ 3,929 =========== =========== =========== =========== =========== (1) All field peratins general and administratin expenses are included in perating expenses. 13 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS (Dllars in Thusands) <TABLE> <CAPTION> Three Mnths Ended March 31, Parent Guarantr Nn-Guarantr Eliminatins Cnslidated <S> <C> <C> <C> <C> <C> Drilling and rental revenues $ - $ 76,845 $ 14,591 $ (537) $ 90,899 Drilling and rental perating expenses - 47,808 11,878 (491) 59,195 Depreciatin and amrtizatin - 15,023 1,226-16,249 Drilling and rental perating incme - 14,014 1,487 (46) 15,455 General and administratin expense(1) 179 (6,221) - - (6,042) Gain n dispsitin f assets, net Ttal perating incme 179 8,516 1,487 (46) 10,136 Other incme and (expense): Interest expense (14,599) (11,536) (914) 13,642 (13,407) Interest incme 12,321 1, (13,642) 249 Lss n extinguishment f debt (316) (316) Minrity interest - - (290) - (290) Other - 83 (46) Equity in net lsses f subsidiaries (2,205) - - 2,205 - Ttal ther incme and (expense) (4,799) (10,313) (820) 2,251 (13,681) Incme (lss) befre incme taxes (4,620) (1,797) 667 2,205 (3,545)

15 Incme tax expense 244 3, ,049 Incme (lss) frm cntinuing peratins (4,864) (5,602) 667 2,205 (7,594) Discntinued peratins - 2, ,730 Net incme (lss) $ (4,864) $ (2,872) $ 667 $ 2,205 $ (4,864) =========== =========== =========== =========== =========== </TABLE> (1) All field peratins general and administratin expenses are included in perating expenses. 14 PARKER DRILLING COMPANY AND SUBSIDIARIES CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS (Dllars in Thusands) <TABLE> <CAPTION> Three Mnths Ended March 31, Parent Guarantr Nn-Guarantr Eliminatins Cnslidated <S> <C> <C> <C> <C> <C> Cash flws frm perating activities: Net incme (lss) $ 3,929 $ 5,828 $ (1,220) $ (4,608) $ 3,929 Adjustments t recncile net incme (lss) t net cash prvided by (used in) perating activities: Depreciatin and amrtizatin - 15, ,876 Gain n dispsitin f assets - (347) (205) - (552) Expenses nt requiring cash 1, ,523 Equity in net earnings f subsidiaries 4, (4,608) - Discntinued peratins Change in perating assets and liabilities 5,248 (2,766) 1,195 9,216 12,893 Net cash prvided by perating activities 14,920 19, ,683 Cash flws frm investing activities: Capital expenditures - (11,850) (756) - (12,606) Prceeds frm the sale f assets - 22, ,991 Net cash prvided by (used in) investing activities - 10,559 (174) - 10,385 Cash flws frm financing activities: Principal payments under debt bligatins (25,024) (25,024) Prceeds frm stck ptins exercised 1, ,954 Intercmpany advances, net 31,277 (30,220) (1,057) - - Net cash prvided by (used in) financing activities 8,207 (30,220) (1,057) - (23,070) Net increase (decrease) in cash and cash equivalents 23,127 (633) (496) - 21,998 Cash and cash equivalents at beginning f year 16,677 7,938 19,652-44,267 Cash and cash equivalents at end f perid $ 39,804 $ 7,305 $ 19,156 $ - $ 66,265 =========== =========== =========== =========== =========== 15 PARKER DRILLING COMPANY AND SUBSIDIARIES

16 CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS (Dllars in Thusands) <TABLE> <CAPTION> Three Mnths Ended March 31, Parent Guarantr Nn-Guarantr Eliminatins Cnslidated <S> <C> <C> <C> <C> <C> Cash flws frm perating activities: Net incme (lss) $ (4,864) $ (2,872) $ 667 $ 2,205 $ (4,864) Adjustments t recncile net incme (lss) t net cash prvided by (used in) perating activities: Depreciatin and amrtizatin - 15,023 1,226-16,249 Gain n dispsitin f assets - (723) - - (723) Expenses nt requiring cash 1, (5) - 2,197 Equity in net lsses f subsidiaries (2,205) - - 2,205 - Discntinued peratins - (879) - - (879) Change in perating assets and liabilities (767) 7,159 6,705 (4,410) 8,687 Net cash (used in) prvided by perating activities (6,314) 18,388 8,593-20,667 Cash flws frm investing activities: Capital expenditures - (5,321) (2) - (5,323) Prceeds frm the sale f assets - 1, ,310 Prceeds frm insurance settlement - 24, ,300 Net cash prvided by (used in) investing activities - 20,289 (2) - 20,287 Cash flws frm financing activities: Principal payments under debt bligatins (15,556) (15,423) Prceeds frm stck ptins exercised Intercmpany advances, net 44,938 (33,252) (11,686) - - Net cash prvided by (used in) financing activities 29,632 (33,119) (11,686) - (15,173) Net increase (decrease) in cash and cash equivalents 23,318 5,558 (3,095) - 25,781 Cash and cash equivalents at beginning f year 53,055 7,806 6,904-67,765 Cash and cash equivalents at end f perid $ 76,373 $ 13,364 $ 3,809 $ - $ 93,546 =========== =========== =========== =========== =========== 16 Reprt f Independent Registered Public Accunting Firm T the Bard f Directrs and Sharehlders Parker Drilling Cmpany We have reviewed the accmpanying cnslidated cndensed balance sheet f Parker Drilling Cmpany and subsidiaries as f March 31, 2005 and the related cnslidated cndensed statements f peratins fr the three mnth perids ended March 31, 2005 and 2004 and the cnslidated cndensed statements f cash flws fr the three mnth perids ended March 31, 2005 and These interim financial statements are the respnsibility f the Cmpany's management. We cnducted ur review in accrdance with the standards f the Public Cmpany Accunting Oversight Bard (United States). A review f interim financial infrmatin cnsists principally f applying analytical prcedures and making inquiries f persns respnsible fr financial and accunting matters. It is substantially less in scpe than an audit cnducted in accrdance with standards f the Public Cmpany Accunting Oversight Bard, the bjective f which is the expressin f an pinin regarding the financial statements taken as a whle. Accrdingly, we d nt express such an pinin.

17 Based n ur review, we are nt aware f any material mdificatins that shuld be made t the accmpanying cnslidated cndensed interim financial statements fr them t be in cnfrmity with accunting principles generally accepted in the United States f America. We previusly audited, in accrdance with standards f the Public Cmpany Accunting Oversight Bard (United States), the cnslidated balance sheet as f December 31, 2004, and the related cnslidated statements f peratins, stckhlders' equity and cash flws fr the year then ended, management's assessment f the effectiveness f the Cmpany's internal cntrl ver financial reprting as f December 31, 2004 and the effectiveness f the Cmpany's internal cntrl ver financial reprting as f December 31, 2004; and in ur reprt (which cntains an explanatry paragraph fr a change in accunting fr gdwill), dated March 15, 2005, we expressed unqualified pinins theren. The cnslidated financial statements and management's assessment f the effectiveness f internal cntrl ver financial reprting referred t abve are nt presented herein. In ur pinin, the infrmatin set frth in the accmpanying cnslidated cndensed balance sheet as f December 31, 2004, is fairly stated in all material respects in relatin t the cnslidated balance sheet frm which it has been derived. /s/pricewaterhusecpers LLP PricewaterhuseCpers LLP Hustn, Texas May 6, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In this Quarterly Reprt n Frm 10-Q, the terms "Parker Drilling," "we," "us" and "ur" refer t Parker Drilling Cmpany, its subsidiaries and the cnslidated jint ventures, unless the cntext requires therwise. This Frm 10-Q cntains statements that are "frward-lking statements" within the meaning f Sectin 27A f the Securities Act f 1933, as amended, and Sectin 21E f the Securities Exchange Act f 1934, as amended. All statements cntained in this Frm 10-Q, ther than statements f histrical facts, are "frward-lking statements" fr purpses f these prvisins, including any statements regarding: prices and demand fr il and natural gas; levels f il and natural gas explratin and prductin activities; demand fr cntract drilling and drilling-related services and demand fr rental tls; ur future perating results; ur future rig utilizatin, rig dayrates and rental tls activity; ur future capital expenditures and investments in the acquisitin and refurbishment f rigs and equipment; ur future liquidity; availability and surces f funds t reduce ur debt and expectatins f when debt will be reduced; future sales f ur assets; the utcme f pending and future legal prceedings; ur recvery f insurance prceeds in respect t ur damaged rig in Nigeria; cmpliance with cvenants under ur credit facilities; and expansin and grwth f ur peratins. In sme cases, yu can identify these statements by wrds that indicate future events such as "anticipate," "believe," "culd," "estimate," "expect," "intend," "utlk," "may," "shuld," "will" and "wuld" r similar wrds. Frward-lking statements are based n certain assumptins and analyses made by ur management in light f their experience and perceptin f histrical trends, current cnditins, expected future develpments and ther factrs they believe are relevant. Althugh ur management believes that their assumptins are

18 reasnable based n infrmatin currently available, thse assumptins are subject t significant risks and uncertainties, many f which are utside f ur cntrl. The fllwing factrs, as well as any ther cautinary language in this Frm 10-Q and ther dcuments referenced herein, prvide examples f risks, uncertainties and events that may cause ur actual results t differ materially frm the expectatins we describe in ur frward-lking statements: wrldwide ecnmic and business cnditins that adversely affect market cnditins and/r the cst f ding business; the U.S. ecnmy and the demand fr natural gas; fluctuatins in the market prices f il and gas; impsitin f unanticipated trade restrictins; unanticipated perating hazards and uninsured risks; plitical instability, terrrism r war; gvernmental regulatins, including changes in tax laws r ability t remit funds t the U.S., that adversely affect the cst f ding business; adverse envirnmental events; adverse weather cnditins; changes in the cncentratin f custmer and supplier relatinships; unexpected cst increases fr upgrade and refurbishment prjects; delays in btaining cmpnents fr capital prjects; shrtages f skilled labr; unanticipated cancellatin f cntracts by peratrs withut cause; breakdwn f equipment and ther peratinal prblems; changes in cmpetitin; and ther similar factrs (sme f which are discussed in dcuments referred t in this Frm 10-Q). Each frward-lking statement speaks nly as f the date f this Frm 10-Q, and we undertake n bligatin t publicly update r revise any frward-lking statements, whether as a result f new infrmatin, future events r therwise. Yu shuld be aware that the ccurrence f the events described abve and elsewhere in this Frm 10-Q culd have a material adverse effect n ur business, results f peratins and financial cnditin. 18 OUTLOOK AND OVERVIEW As anticipated in ur annual reprt, we returned t prfitability in the first quarter f Favrable market cnditins cntinued t psitively impact utilizatin and dayrates fr mst segments f ur drilling peratins and rental tls business during the first quarter. Rbust demand and uncertainty ver pssible disruptins in supply have kept il and gas prices strng and absent any material change in these market frces, we believe that these cnditins will cntinue thrugh Our utlk fr all regins is psitive. Our eight-rig peratin in Mexic, which achieved 100 percent perating status late in the third quarter f 2004, cntinued t perate at 100 percent during the first quarter. These rigs are under cntracts with Petrles Mexicans S.A. ("Pemex") and Halliburtn de Mexic ("Halliburtn") thrugh the first quarter f 2006 and the cntracts include ptins fr extensins beynd the initial perid. We entered int definitive agreements t sell ur remaining seven rigs in Clmbia and Peru n May 6, We expect t recgnize a gain n the dispsitin f these assets, and, by using the prceeds t retire debt, n-ging earnings and cash flw will nt be impaired. In Kazakhstan, utilizatin f ur five land rigs remains at 80 percent and barge rig 257, which perates in the nrth Caspian Sea, began drilling at the end f December under a tw-well cntract which the peratr has the right t extend fr up t fur additinal wells. Rig 236 is in rute frm its last perating lcatin in Usinsk, Russia t Turkmenistan, which will bring the ttal t three rigs we will have wrking under cntract with Calik Enerji, A.S. ("Calik"). In Indnesia, tw rigs that had been stacked are nw under cntract with the ptential fr a third rig t return t wrk. In additin, we anticipate that in June, we will begin earning revenue pursuant t a five-year cntract t prvide peratins and maintenance fr a secnd rig in Sakhalin Island, Russia. Barge rigs 73 and 75 in Nigeria cntinue t perate under multiple year cntracts.

19 In the U.S., barge rig 72, which began its mve frm Nigeria t the U.S. Gulf f Mexic regin in late 2004, arrived in February and began a multi-well cntract in late April. Heightened demand fr drilling in this area has cntinued t cause dayrates t increase. As f March 31, 2005, we had apprximately $96.0 millin f liquidity. This liquidity was cmprised f $66.3 millin f cash n hand and $29.7 millin f availability under ur revlving credit facility. As f March 31, 2005, we have reduced ur debt by $134.0 millin since the beginning f 2003, $25.0 millin f which has ccurred during 2005, and ur utstanding debt balance is currently $456.0 millin, cmpared t the balance as f December 31, 2004, f $481.0 millin and a balance f $590.0 millin when we established ur gal f reducing debt by $200 millin. The debt reductin has resulted in a $2.4 reductin in interest expense in the first quarter f 2005 as cmpared t the first quarter f In ur first quarter earnings release cnference call, we reaffirmed ur previusly annunced guidance f net incme per share f $0.05 t $0.14 fr 2005, thugh based n the results in the first quarter we wuld expect t be mre tward the mid t high end f the range. This guidance includes apprximately $0.04 per share expense related t the call premium n the $65.0 millin debt redemptin discussed in Nte 6 in the ntes t the unaudited cnslidated cndensed financial statements. RESULTS OF OPERATIONS Three Mnths Ended March 31, 2005 Cmpared with Three Mnths Ended March 31, 2004 We recrded net incme f $3.9 millin fr the three mnths ended March 31, 2005, including incme f $0.1 millin attributable t discntinued peratins, as cmpared t a net lss f $4.9 millin fr the three mnths ended March 31, 2004, including incme f $2.7 millin attributable t discntinued peratins. Our incme frm cntinuing peratins fr the current quarter was $3.8 millin cmpared t a lss f $7.6 millin frm cntinuing peratins fr the three mnths ended March 31, As f March 31, 2005 we have achieved 67 percent f ur gal f $200 millin f debt reductin. We anticipate that additinal asset sales shuld enable us t achieve 100 percent f the gal by the end f As discussed abve, we have already achieved ur gal f returning t prfitability. 19 RESULTS OF OPERATIONS (cntinued) The analysis belw begins with a breakdwn f the cntinuing peratins fllwed by a discussin f discntinued peratins. <Table> <Captin> Three Mnths Ended March 31, (Dllars in Thusands) <S> <C> <C> <C> <C> Drilling and rental revenues: U.S. drilling $ 27,117 23% $ 19,759 22% Internatinal drilling 72,172 60% 56,037 61% Rental tls 20,954 17% 15,103 17% Ttal drilling and rental revenues $ 120, % $ 90, % ============ ============ ============ ============ Drilling and rental perating incme: U.S. drilling grss margin(1) $ 12,729 47% $ 7,068 36% Internatinal drilling grss margin(1) 16,369 23% 16,146 29% Rental tls grss margin(1) 12,769 61% 8,490 56%

20 Depreciatin and amrtizatin (16,876) (16,249) Ttal drilling and rental perating incme(2) 24,991 15,455 General and administratin expense (6,976) (6,042) Gain n dispsitin f assets, net Ttal perating incme $ 18,567 $ 10,136 ============ ============ (1) Drilling and rental grss margins are cmputed as drilling and rental revenues less direct drilling and rental perating expenses, excluding depreciatin and amrtizatin expense; drilling and rental grss margin percentages are cmputed as drilling and rental grss margin as a percent f drilling and rental revenues. The grss margin amunts and grss margin percentages shuld nt be used as a substitute fr thse amunts reprted under GAAP. Hwever, we mnitr ur business segments based n several criteria, including drilling and rental grss margin. Management believes that this infrmatin is useful t ur investrs because it mre clsely tracks cash generated by segment. Such grss margin amunts are recnciled t ur mst cmparable GAAP measure as fllws: <Table> <Captin> Internatinal U.S. Drilling Drilling Rental Tls (Dllars in Thusands) <S> <C> <C> <C> Three Mnths Ended March 31, Drilling and rental perating incme(2) $ 8,093 $ 7,882 $ 9,016 Depreciatin and amrtizatin 4,636 8,487 3, Drilling and rental grss margin $ 12,729 $ 16,369 $ 12,769 ============ ============ ============ Three Mnths Ended March 31, Drilling and rental perating incme(2) $ 2,312 $ 8,144 $ 4,999 Depreciatin and amrtizatin 4,756 8,002 3, Drilling and rental grss margin $ 7,068 $ 16,146 $ 8,490 ============ ============ ============ (2) Drilling and rental perating incme - drilling and rental revenues less direct drilling and rental perating expenses, including depreciatin and amrtizatin expense. U.S. Drilling Segment The U.S. drilling segment, cnsisting f 19 barge rigs, experienced increases in bth rig utilizatin and dayrates during the first quarter f As a result, revenues increased $7.4 millin t $27.1 millin as cmpared t the first quarter f The increased revenues were primarily due t the peratin f barge rigs 26 and 20 which were reactivated in the furth quarter f 2004 and high utilizatin fr all rigs during the quarter until late in the quarter when barge rig 12 came ff cntract. Barge rig utilizatin increased frm 62 percent during the first quarter f 2004 t 77 percent in the current quarter and dayrates increased apprximately 24 percent. In February, barge rig 72 was relcated t the U.S. Gulf f Mexic regin frm Nigeria and renvatins began. After the mve f this rig, we have nine deep drilling barges, fur intermediate drilling barges and six wrkver rigs in the U.S. Gulf f Mexic market. Rig 72 began a multi-well cntract in late April RESULTS OF OPERATIONS (cntinued)