PKD - Embedded Expectations Analysis - 2018 10 11
Parker Drilling Company (PKD:USA) currently trades at historical lows relative to UAFRS-based (Uniform) Assets, with a 0.4x Uniform P/B. However, even at these levels, the market has muted expectations for the firm, while management has concerns about Mexico and Indonesia, the fundamentals of their Rentals segment, and their underperforming drilling businessSpecifically, management may lack confidence in their decision to implement a
short-term shareholder rights plan, and may be concerned about low permitting activity going forward. Moreover, they may lack confidence in the sustainability of strong fundamentals in their Rentals business, and in their ability to drive a rebound in their drilling business. They may also lack confidence in their statement that they will continue to work for some of their primary customers in Alaska in the future, and in their ability to get their second rig operational by 2019. Furthermore, they may lack confidence in their ability to maintain momentum in Mexico, and improve segment revenues. Finally, they may have concerns about their two rigs in Indonesia
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