| PARKER DRILLING CO /DE/ ITEM 1A RISK FACTORS The contract drilling and rental tools businesses involve a high degree of risk |
| You should consider carefully the risks and uncertainties described below and the other information included in this Form 10-K, including the financial statements and related notes, before deciding to invest in our securities |
| While these are the risks and uncertainties we believe are most important for you to consider, you should know that they are not the only risks or uncertainties facing us or which may adversely affect our business |
| If any of the following risks or uncertainties actually occur, our business, financial condition or results of operations could be adversely affected |
| 7 _________________________________________________________________ [63]Table of Contents ITEM 1A RISK FACTORS (continued) Risk Factors Related to Our Business Failure to retain key personnel could hurt our operations |
| We require highly skilled and experienced personnel to provide technical services and support for our drilling operations |
| Although we use our training center to train personnel and promote from within, as the demand for drilling services and the size of the worldwide rig fleet has recently increased, it has become more difficult to retain existing personnel and shortages of qualified personnel have arisen, which could create upward pressure on wages and prevent us from retaining or attracting qualified personnel in a cost-effective manner |
| We have substantial indebtedness |
| Our ability to service our debt obligations is primarily dependent upon our future financial performance |
| We have substantial indebtedness in relation to our stockholders’ equity |
| As of December 31, 2005, we had stockholders’ equity of approximately dlra259dtta8 million compared to approximately: • dlra380dtta0 million of long-term debt; • dlra13dtta3 million of operating lease commitments; and • dlra10dtta3 million of standby letters of credit |
| Our ability to meet our debt service obligations depends on our ability to generate positive cash flows from operations |
| We realized positive cash flows from operating activities of dlra122dtta6 million in 2005, dlra28dtta8 million in 2004, and dlra62dtta5 million in 2003, and were successful with a dlra99dtta9 million equity offering in January 2006 |
| However, we have in the past, and may in the future, incur negative cash flows from one or more segments of our operating activities |
| Our future cash flows from operating activities will be influenced by the demand for our drilling services, the utilization of our rigs, the dayrates that we receive for our rigs, general economic conditions and by financial, business and other factors affecting our operations, many of which are beyond our control, and some of which are specified below |
| If we are unable to service our debt obligations, we may have to: • delay spending on maintenance projects and other capital projects, including the acquisition or construction of additional rigs, rental tools and other assets; • sell equity securities; • sell assets; or • restructure or refinance our debt |
| Our substantial debt, and the covenants contained in the instruments governing our debt could have important consequences to you |
| For example, it could: • result in a reduction of our credit rating, which would make it more difficult for us to obtain additional financing on acceptable terms; • require us to dedicate a substantial portion of our cash flows from operating activities to the repayment of our debt and the interest associated with our debt; • limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt and creating liens on our properties; • place us at a competitive disadvantage compared with our competitors that have relatively less debt; • expose us to interest rate risk because certain of our borrowings and our Senior Floating Rate Notes, or interest rate swaps related to those borrowings, are at variable rates of interest; and • make us more vulnerable to downturns in our business |
| We cannot give you any assurances that, if we are unable to service our debt obligations, we will be able to sell equity securities, sell additional assets or restructure or refinance our debt |
| Our ability to generate sufficient cash 8 _________________________________________________________________ [64]Table of Contents ITEM 1A RISK FACTORS (continued) Risk Factors Related to Our Business (continued) flow from operating activities to pay the principal of and interest on our indebtedness is subject to market conditions and other factors which are beyond our control |
| Our current operations and future growth may require significant additional capital, and our substantial indebtedness could impair our ability to fund our capital requirements |
| Our business requires substantial capital (we anticipate that our capital expenditures in 2006 will be approximately dlra240 million, including approximately dlra40 million for maintenance projects) |
| We may require additional capital in the event of significant departures from our current business plan or unanticipated expenses |
| Sources of funding for our future capital requirements may include any or all of the following: • funds generated from our operations; • public offerings or private placements of equity and debt securities; • commercial bank loans; • capital leases; and • sales of assets |
| Due to our highly leveraged capital structure, additional financing may not be available to us, or, if it were available, it may not be available on a timely basis, on terms acceptable to us and within the limitations contained in the indentures governing the 9dtta625prca Senior Notes and our Senior Floating Rate Notes and the documentation governing our senior secured credit facility |
| Failure to obtain appropriate financing, should the need for it develop, could impair our ability to fund our capital expenditure requirements and meet our debt service requirements and could have an adverse effect on our business |
| Rig upgrade, refurbishment and construction projects are subject to risks, including delays and cost overruns, which could have an adverse impact on our results of operations and cash flows |
| We often have to make upgrade and refurbishment expenditures for our rig fleet to comply with our quality management and preventive maintenance system or contractual requirements or when repairs are required in response to an inspection by a governmental authority |
| For example, in 2002, we were required to make repairs to two of our barge rigs in Nigeria to maintain our certification with the American Bureau of Shipping, resulting in downtime of a total of five months during which time we received no revenues |
| We may also make significant expenditures when we move rigs from one location to another, such as when we moved barge rig 72 from Nigeria to the US Gulf of Mexico in 2004 |
| Additionally, we may make substantial expenditures for the construction of new rigs |
| Rig upgrade, refurbishment and construction projects are subject to the risks of delay or cost overruns inherent in any large construction project, including the following: • shortages of material or skilled labor; • unforeseen engineering problems; • unanticipated change orders; • work stoppages; • adverse weather conditions; • long lead times for manufactured rig components; • unanticipated cost increases; and • inability to obtain the required permits or approvals |
| Significant cost overruns or delays could adversely affect our financial condition and results of operations |
| Additionally, capital expenditures for rig upgrade, refurbishment or construction projects could exceed our planned capital expenditures, impairing our ability to service our debt obligations |
| 9 _________________________________________________________________ [65]Table of Contents ITEM 1A RISK FACTORS (continued) Risk Factors Related to Our Business (continued) Volatile oil and natural gas prices impact demand for our drilling and related services |
| The success of our drilling operations is materially dependent upon the exploration and development activities of the major, independent and national oil and gas companies that comprise our customer base |
| Oil and natural gas prices and market expectations can be extremely volatile, and therefore the level of exploration and production activities can be extremely volatile |
| Increases or decreases in oil and natural gas prices and expectations of future prices could have an impact on our customers’ long-term exploration and development activities, which in turn could materially affect our business and financial performance |
| Generally, changes in the price of oil have a greater impact on our international operations while changes in the price of natural gas have a greater effect on our operations in the Gulf of Mexico |
| Demand for our drilling and related services also depends upon other factors, many of which are beyond our control, including: • the cost of producing and delivering oil and natural gas; • advances in exploration, development and production technology; • laws and government regulations, both in the United States and elsewhere; • the imposition or lifting of economic sanctions against foreign countries; • local and worldwide military, political and economic events, including events in the oil producing countries in the Middle East; • the ability of the Organization of Petroleum Exporting Countries, (“OPEC”), to set and maintain production levels and prices; • the level of production by non-OPEC countries; • weather conditions; • expansion or contraction of economic activity, which affects levels of consumer demand; • the rate of discovery of new oil and gas reserves; • the availability of pipeline capacity; and • the policies of various governments regarding exploration and development of their oil and gas reserves |
| Oil and gas prices have increased significantly since 2003 based primarily on worldwide demand and political instability |
| There is historical support that current prices are not sustainable over the long term |
| Based on recent history of our industry, fluctuations during the past several years in the demand and supply of oil and natural gas have contributed to, and are likely to continue to contribute to price volatility |
| Any actual or anticipated reduction in oil and natural gas prices would depress the level of exploration and production activity |
| This would, in turn, result in a corresponding decline in the demand for our drilling and related services which would adversely affect our business and financial performance |
| Most of our contracts are subject to cancellation by our customers without penalty with little or no notice |
| Most of our contracts are subject to cancellation by our customers without penalty with relatively little or no notice |
| Also, customers may seek to renegotiate the terms of their existing drilling contracts during depressed market conditions |
| Although drilling conditions are currently favorable, in the event the market becomes depressed, customers are more likely to exercise their termination rights |
| Our customers may also seek to terminate drilling contracts if we experience operational problems and customers are more likely to exercise their termination rights during depressed market conditions |
| If our equipment fails to function properly and cannot be repaired promptly, we will not be able to engage in drilling operations, and customers may have the right to terminate the drilling contracts |
| The cancellation or renegotiation of a number of our drilling contracts could adversely affect our financial performance |
| 10 _________________________________________________________________ [66]Table of Contents ITEM 1A RISK FACTORS (continued) Risk Factors Related to Our Business (continued) We rely on a small number of customers, and the loss of a significant customer could adversely affect us |
| A substantial percentage of our revenues are generated from a relatively small number of customers, and the loss of a major customer would adversely affect us |
| In 2005, ExxonMobil and its ventures accounted for approximately 14 percent of our total revenues, and ChevronTexaco and a consortium in which Chevron is a partner, TCO, accounted for approximately 11 percent of our total revenues |
| Our ten most significant customers collectively accounted for approximately 61 percent of our total revenues in 2005 |
| Our results of operations could be adversely affected if any of our major customers terminate their contracts with us, fail to renew our existing contracts or refuse to award new contracts to us |
| Contract drilling and the rental tools business are highly competitive |
| The contract drilling and rental tools markets are highly competitive, and no single competitor is dominant |
| Although the drilling market is currently experiencing a strong upward trend, during periods of decreased demand we historically experience significant reductions in utilization |
| We anticipate that current demand for oil and gas will result in higher utilization rates for the foreseeable future |
| However, if commodity prices decline again or other factors adversely affect demand for drilling activity, our utilization rates and financial performance will be adversely affected |
| Contract drilling companies compete primarily on a regional basis, and competition may vary significantly from region to region at any particular time |
| Many drilling and workover rigs can be moved from one region to another in response to changes in levels of activity, provided market conditions warrant, which may result in an oversupply of rigs in an area |
| In many markets in which we operate, the number of rigs available has historically exceeded the demand for rigs for extended periods of time, resulting in intense price competition |
| Most drilling and workover contracts are awarded on the basis of competitive bids, which also results in price competition |
| Despite high commodity prices at present, we believe that competition for drilling contracts will continue to be intense for the foreseeable future |
| If we cannot keep our rigs utilized, our financial performance will be adversely impacted |
| The rental tools market is also characterized by vigorous competition among several competitors |
| Many of our competitors in both the contract drilling and rental tools business possess significantly greater financial resources than we do |
| Our international operations could be adversely affected by terrorism, war, civil disturbances, political instability and similar events |
| We have operations in 12 foreign countries and have recently contracted, through a joint venture, for work in Saudi Arabia |
| Our international operations are subject to interruption, suspension and possible expropriation due to terrorism, war, civil disturbances, political instability and similar events and we have previously suffered loss of revenue and damage to equipment due to political violence |
| We may not be able to obtain insurance policies covering such risks, especially political violence coverage, or such policies may only be available with premiums that are not commercially justifiable |
| For example, significant civil unrest in Nigeria, which is continuing, has resulted in the suspension of drilling operations of our rigs in Nigeria for substantial periods during the past two years and again beginning in February 2006 |
| In 2003, civil disturbances resulted in the total loss of one of our rigs in Nigeria, a substantial portion of which we recovered from insurance |
| Our international operations are also subject to governmental regulation and other risks |
| We derive a significant portion of our revenues from our international operations |
| In 2004 and 2005, we derived approximately 59 percent of our revenues from operations in countries outside the United States |
| Our international operations are subject to the following risks, among others: • foreign laws and governmental regulation; • expropriation, confiscatory taxation and nationalization of our assets located in areas in which we operate; • hiring and retaining skilled and experienced workers, many of which are represented by foreign labor unions; • unfavorable changes in foreign monetary and tax policies and unfavorable and inconsistent interpretation and application of foreign tax laws; and • foreign currency fluctuations and restrictions on currency repatriation |
| 11 _________________________________________________________________ [67]Table of Contents ITEM 1A RISK FACTORS (continued) Risk Factors Related to Our Business (continued) Our international operations are subject to the laws and regulations of a number of foreign countries |
| Additionally, our ability to compete in international contract drilling markets may be adversely affected by foreign governmental regulations or other policies that favor the awarding of contracts to contractors in which nationals of those foreign countries have substantial ownership interests |
| Furthermore, our foreign subsidiaries may face governmentally imposed restrictions or fees from time to time on the transfer of funds to us |
| While we have been successful in most cases in contractually limiting these risks by transferring the risk of loss to the operators, we cannot completely eliminate such risk |
| A significant portion of the workers we employ in our international operations are members of labor unions or otherwise subject to collective bargaining |
| We may not be able to hire and retain a sufficient number of skilled and experienced workers for wages and other benefits that we believe are commercially reasonable |
| We have historically been successful in limiting the risks of currency fluctuation and restrictions on currency repatriation by obtaining contracts providing for payment in US dollars or freely convertible foreign currencies |
| However, some countries in which we may operate could require that all or a portion of our revenues be paid in local currencies that are not freely convertible |
| In addition, some parties with which we do business may require that all or a portion of our revenues be paid in local currencies |
| To the extent possible, we limit our exposure to potentially devaluating currencies by matching the acceptance of local currencies to our expense requirements in those currencies |
| Although we have done this in the past, we may not be able to obtain such contractual terms in the future, thereby exposing us to foreign currency fluctuations that could have a material adverse effect upon our results of operations and financial condition |
| Compliance with foreign tax and other laws may adversely affect our operations |
| Tax and other laws and regulations are not always interpreted consistently among local, regional and national authorities |
| See Note 12 in the notes to the consolidated financial statements for an example of pending tax disputes |
| The ultimate outcome of these disputes is not certain, and it is possible that the outcome could have an adverse effect on our financial performance |
| It is also possible that in the future we will be subject to similar disputes concerning taxation and other matters in Kazakhstan and other countries in which we do business, and these disputes could have a material adverse effect on our financial performance |
| We are subject to hazards customary for drilling operations, which could adversely affect our financial performance if we are not adequately indemnified or insured |
| Substantially all of our operations are subject to hazards that are customary for oil and gas drilling operations, including blowouts, reservoir damage, loss of well control, cratering, oil and gas well fires and explosions, natural disasters, pollution and mechanical failure |
| Our offshore operations also are subject to hazards inherent in marine operations, such as capsizing, grounding, collision and damage from severe weather conditions |
| Our international operations are also subject to risks of terrorism, war, civil disturbances and other political events |
| Any of these risks could result in damage to or destruction of drilling equipment, personal injury and property damage, suspension of operations or environmental damage |
| We have had accidents in the past demonstrating some of these hazards |
| For example, in June 2005, a well control incident resulted in a fire and damage to a rig in Bangladesh, resulting in a total loss of the drilling unit |
| In July 2005, we suffered damage to a deep drilling barge rig which ran aground and overturned and in November 2005 we sustained a well control incident in Turkmenistan |
| Generally, drilling contracts provide for the division of responsibilities between a drilling company and its customer, and we generally obtain indemnification from our customers by contract for some of these risks |
| However, the laws of certain countries place significant limitations on the enforceability of indemnification provisions that allow a contractor to be indemnified for damages resulting from the contractor’s fault |
| To the extent that we are unable to transfer such risks to customers by contract or indemnification agreements, we generally seek protection through insurance |
| However, we have a significant amount of self-insured retention or deductible for certain losses relating to workers’ compensation, employers’ liability, general liability (for onshore liability), protection and indemnity (for offshore liability), and property damage |
| For further information, see Note 12 in the notes to the consolidated financial statements |
| There is no assurance that such insurance or indemnification agreements will adequately protect us against liability from all of the consequences of the hazards and risks described above |
| The occurrence of an event not fully insured or for which we are not indemnified against, or the failure of a customer or insurer to meet its indemnification or insurance 12 _________________________________________________________________ [68]Table of Contents ITEM 1A RISK FACTORS (continued) Risk Factors Related to Our Business (continued) obligations, could result in substantial losses |
| In addition, there can be no assurance that insurance will continue to be available to cover any or all of these risks, or, even if available, that insurance premiums or other costs will not rise significantly in the future, so as to make the cost of such insurance prohibitive |
| Government regulations and environmental risks, which reduce our business opportunities and increase our operating costs, might worsen in the future |
| Government regulations control and often limit access to potential markets and impose extensive requirements concerning employee safety, environmental protection, pollution control and remediation of environmental contamination |
| Environmental regulations, in particular, prohibit access to some markets and make others less economical, increase equipment and personnel costs and often impose liability without regard to negligence or fault |
| In addition, governmental regulations may discourage our customers’ activities, reducing demand for our products and services |
| We may be liable for damages resulting from pollution of offshore waters and, under United States regulations, must establish financial responsibility in order to drill offshore |
| We are regularly involved in litigation, some of which may be material |
| We are regularly involved in litigation, claims and disputes incidental to our business, which at times involve claims for significant monetary amounts, some of which would not be covered by insurance |
| For example, in September 2005, one of our subsidiaries was served with a lawsuit filed in the District Court of Houston, Texas |
| See Note 12 in the notes to the consolidated financial statements |
| We intend to defend ourselves vigorously and, based on the information available to us at this time, we do not expect the outcome of these lawsuits to have a material adverse effect on our financial condition, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these lawsuits |
| Risks Related to Our Common Stock Market prices of our common stock could change significantly |
| The market prices of our common stock may change significantly in response to various factors and events, including the following: • the other risk factors described in this Form 10-K, including changes in oil and gas prices; • a shortfall in rig utilization, operating revenue or net income from that expected by securities analysts and investors; • changes in securities analysts’ estimates of the financial performance of us or our competitors or the financial performance of companies in the oilfield service industry generally; • changes in actual or market expectations with respect to the amounts of exploration and development spending by oil and gas companies; • general conditions in the economy and in the oil and gas or oilfield service industries; • general conditions in the securities markets; • political instability, terrorism or war; and • the outcome of pending and future legal proceedings, tax assessments and other claims, including the outcome of our dispute with the Ministry of Finance of the Republic of Kazakhstan |
| A hostile takeover of our Company would be difficult |
| We have adopted a stockholders’ rights plan |
| Some of the provisions of our Restated Certificate of Incorporation and of the Delaware General Corporation Law may make it difficult for a hostile suitor to acquire control of our Company and to replace our incumbent management |
| For example, our Restated Certificate of Incorporation 13 _________________________________________________________________ [69]Table of Contents ITEM 1A RISK FACTORS (continued) Risks Related to Our Common Stock (continued) provides for a staggered Board of Directors and permits the Board of Directors, without stockholder approval, to issue additional shares of common stock or a new series of preferred stock |
| Risks Related to our Debt Securities Payment of principal and interest on our notes will be effectively subordinated to our senior secured debt to the extent of the value of the assets securing that debt |
| Our 9dtta625prca Senior Notes and our Senior Floating Rate Notes and the guarantees related to those notes are senior unsecured obligations of Parker Drilling and certain of our domestic subsidiaries that rank senior in right of payment to all current and future subordinated debt |
| Holders of our secured obligations, including obligations under our senior secured credit facility, will have claims that are prior to claims of the holders of our notes with respect to the assets securing those obligations |
| In the event of a liquidation, dissolution, reorganization, bankruptcy or any similar proceeding, our assets and those of our subsidiaries will be available to pay obligations on the notes and the guarantees only after holders of our senior secured debt have been paid the value of the assets securing such debt |
| Accordingly, there may not be sufficient funds remaining to pay amounts due on all or any of the notes |
| We have granted the lenders under our senior secured credit facility a security interest in (i) all accounts receivable, and certain deposit accounts, of (a) Parker Drilling Company and (b) substantially all of our material direct and indirect domestic subsidiaries; (ii) the stock of all of our direct and indirect domestic subsidiaries; and (iii) substantially all of the personal property assets of our rental tools business |
| In the event of a default on secured indebtedness, the parties granted security interests will have a prior secured claim on such assets |
| If the parties should attempt to foreclose on their collateral, our financial condition and the value of the notes would be adversely affected |
| We are a holding company and conduct substantially all of our operations through our subsidiaries, which may affect our ability to make payments on our notes |
| We conduct substantially all of our operations through our subsidiaries |
| As a result, our cash flows and our ability to service our debt, including our notes, is dependent upon the earnings of our subsidiaries |
| In addition, we are dependent on the distribution of earnings, loans or other payments from our subsidiaries to us |
| Any payment of dividends, distributions, loans or other payments from our subsidiaries to us could be subject to statutory restrictions |
| In addition, payment of dividends or distributions from our joint ventures are subject to contractual restrictions |
| Payments to us by our subsidiaries also will be contingent upon the profitability of our subsidiaries |
| If we are unable to obtain funds from our subsidiaries we may not be able to pay interest or principal on the notes when due, or to redeem our notes upon a change of control, and we cannot assure you that we will be able to obtain the necessary funds from other sources |
| Our notes are guaranteed by certain of our direct and indirect domestic subsidiaries, and an international subsidiary |
| As of December 31, 2005, our non-guarantor subsidiaries and joint ventures collectively owned approximately 18 percent of our consolidated total assets and held approximately dlra17dtta1 million of our consolidated cash and cash equivalents of approximately dlra60dtta2 million |
| In 2005, our non-guarantor subsidiaries and joint ventures had drilling and rental revenues of approximately dlra156dtta8 million and total operating income of approximately dlra1dtta6 million |
| The amount of our consolidated total assets and cash and cash equivalents held by, and the amount of our consolidated drilling and rental revenues and operating income derived from, our non-guarantor subsidiaries and joint ventures has increased in each of the last three years, and we expect that this trend will continue as we expand our international operations |
| See Note 5 to the notes to the consolidated financial statements |
| 14 _________________________________________________________________ [70]Table of Contents ITEM 1A RISK FACTORS (continued) Risks Related to our Debt Securities (continued) The subsidiary guarantees of our notes could be deemed fraudulent conveyances under certain circumstances, and a court may try to subordinate or void the subsidiary guarantees |
| Under the federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee: • received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; or • was insolvent or rendered insolvent by reason of such incurrence; or • was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or • intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature |
| In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor |
| The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred |
| Generally, however, a guarantor would be considered insolvent if: • the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; • the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability, including contingent liabilities, on its existing debts, as they become absolute and mature; or • it could not pay its debts as they become due |
| Upon the occurrence of specific change of control events affecting us, the holders of our notes will have the right to require us to repurchase our notes at 101 percent of their principal amount, plus accrued and unpaid interest |
| Our ability to repurchase our notes upon such a change of control event would be limited by our access to funds at the time of the repurchase and the terms of our other debt agreements |
| Upon a change of control event, we may be required immediately to repay the outstanding principal, any accrued interest on and any other amounts owed by us under our senior secured credit facilities, our notes and other outstanding indebtedness |
| The source of funds for these repayments would be our available cash or cash generated from other sources |
| However, we cannot assure you that we will have sufficient funds available upon a change of control to make any required repurchases of this outstanding indebtedness |
| In addition, the change of control provisions in the indentures governing our notes may not protect the holders of our notes from certain important corporate events, such as a leveraged recapitalization (which would increase the level of our indebtedness), reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a “Change of Control” under the indenture |
| Such a transaction may not involve a change in voting power or beneficial ownership or, even if it does, may not involve a change that constitutes a “Change of Control” as defined in the indenture that would trigger our obligation to repurchase the notes |
| Therefore, if an event occurs that does not constitute a “Change of Control” as defined in the indenture, we will not be required to make an offer to repurchase the notes and the holders may be required to continue to hold their notes despite the event |
| DISCLOSURE NOTE REGARDING FORWARD-LOOKING STATEMENTS This Form 10-K contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act |
| All statements contained in this Form 10-K, other than statements of 15 _________________________________________________________________ [71]Table of Contents ITEM 1A RISK FACTORS (continued) DISCLOSURE NOTE REGARDING FORWARD-LOOKING STATEMENTS (continued) historical facts, are “forward-looking statements” for purposes of these provisions, including any statements regarding: • stability of prices and demand for oil and natural gas; • levels of oil and natural gas exploration and production activities; • demand for contract drilling and drilling related services and demand for rental tools; • our future operating results and profitability; • our future rig utilization, dayrates and rental tools activity; • entering into new, or extending existing, drilling contracts and our expectations concerning when our rigs will commence operations under such contracts; • growth of the Company through acquisitions of companies or assets; • entering into joint venture agreements with local companies; • our future capital expenditures and investments in the acquisition and refurbishment of rigs and equipment; • our future liquidity; • availability and sources of funds to reduce our debt and expectations of when debt will be reduced; • the outcome of pending and future legal proceedings, tax assessments and other claims, including the outcome of our dispute with the Ministry of Finance of the Republic of Kazakhstan; • our recovery of insurance proceeds with respect to our damaged assets; • the availability of insurance coverage and contractual indemnification for pending legal proceedings; • compliance with covenants under our senior credit facility and indentures for our senior notes; and • expansion and growth of our operations |
| Forward-looking statements are based on certain assumptions and analyses made by our management in light of their experience and perception of historical trends, current conditions, expected future developments and other factors they believe are relevant |
| Although our management believes that their assumptions are reasonable based on information currently available, those assumptions are subject to significant risks and uncertainties, many of which are outside of our control |
| The factors listed in the “Risk Factors” section of this Form 10-K, as well as any other cautionary language included in this Form 10-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements |
| Each forward-looking statement speaks only as of the date of this Form 10-K, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise |
| Before you decide to invest in our securities, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this Form 10-K could have a material adverse effect on our business, results of operations, financial condition and cash flows |