##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  (MARK ONE)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL
    YEAR ENDED DECEMBER 31, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD
    FROM          TO   COMMISSION FILE NUMBER 1-7573
 PARKER DRILLING
    COMPANY
 (Exact name of registrant as
    specified in its charter)
  Delaware

73-0618660(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)5 Greenway Plaza,
    Suite 100, Houston, Texas(Address of principal
    executive offices)

77046(Zip
    code)   Registrants telephone number, including area code: (281) 406-2000
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which Registered:Common Stock, par value
    $0.162/3
    per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
   o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


13Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 3.


Legal Proceedings


27Item 4.


Reserved


27PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


28Item 6.


Selected Financial Data


29Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


46Item 8.


Financial Statements and Supplementary Data


48Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


88Item 9A.


Controls and Procedures


88Item 9B.


Other Information


89PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


89Item 11.


Executive Compensation


89Item 12.


Security Ownership of Certain Beneficial Owners,
    Management and Related Stockholder Matters


89Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


89Item 14.


Principal Accounting Fees and Services


90PART IVItem 15.


Exhibits and Financial Statement Schedules


90Signatures


94EX-10.N.3EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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PART I  ITEM 1.
    BUSINESS  General
        
    International Drilling, including land drilling and inland barge
    drilling;
    U.S. Drilling;
    Rental Tools;
    Project Management and Engineering Services; and
    Construction Contract.  Our Rig
    Fleet
    
    eleven rigs in the Commonwealth of Independent
    States/Africa-Middle East (CIS/AME) region,
    including eight land rigs and one arctic-class barge rig in
    Kazakhstan and two land rigs in Algeria;
    ten rigs in the Americas region, including seven land rigs and
    one barge rig in Mexico and two land rigs in Colombia;
    eight land rigs in the Asia Pacific region, including four rigs
    in Indonesia, two rigs in Papua New Guinea and two rigs in New
    Zealand;
    thirteen barge drilling rigs in the inland and shallow waters of
    the U.S. Gulf of Mexico (GOM); and
    one unassigned land rig currently held in our construction yard
    in New Iberia, Louisiana.    Our
    Rental Tools Business
   3




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Our
    Project Management and Engineering Services Business
    Our
    Construction Contract Business
    Our
    Market Areas
  International Markets (including Alaska).
  
    customers who typically are large independent, national energy
    companies, or integrated service providers;
    drilling programs in remote locations with little infrastructure
    and/or harsh
    environments requiring specialized drilling equipment with a
    large inventory of spare parts and other ancillary equipment and
    self-supported service capabilities; and
    difficult (i.e., high pressure, deep depths, hazardous or
    geologically challenging) wells requiring specialized equipment
    and considerable experience to drill.    U.S. Gulf of Mexico and Inland
    Waterways. well-to-well,
  U.S. Land Market.
 4




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Our
    Strategy
    Achieving and Maintaining Market
    Leadership.
  Growing Through Selective Investment.
  Differentiating the Parker Brand.
  Safety:
  Training:
  Technology: 75-year
  Performance:
  Maintaining Financial Discipline.
 5




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stronger-than-peer
  2009
    Strategic Actions.
    
    Our International Drilling segment significantly improved its
    operating gross margin as a percent of revenues, to
    35 percent for 2009 from 29 percent for 2008, as it
    gained, or made progress in gaining, market leadership in select
    international markets. Creating the critical mass to develop
    market leadership grew from our previous actions to cluster rigs
    in markets selected for their current employment of sufficient
    rigs, thereby allowing us to leverage our operating
    infrastructure and expectations for further growth;
    Our U.S. Barge Drilling business pushed into a leadership
    position in the GOM inland and shallow water drilling market as
    a result of both its past investments to overhaul and upgrade
    its fleet to standards that provided efficient and safe
    performance that has been preferred by operators and its actions
    to keep its rigs available and work-ready to capture more of the
    available work during the recent market downturn;
    Our U.S. Barge Drilling business achieved a slightly
    favorable cash flow despite an exceptional decline in its market
    by selective cost reduction actions, innovative crew retention
    programs and assertive marketing, leveraged by its position as a
    preferred contractor in the industry.
    We began construction of two high-efficiency, arctic-class land
    rigs that are scheduled to enter the Alaska market in 2010 under
    long term contracts;
    Our rental tools business segment commissioned a satellite
    operation in Pennsylvania, with plans to expand to a full-scale
    facility when activity levels justify it, to serve the emerging
    demand from operators drilling the Marcellus shale formation;
    We were awarded the O&M contract for the operation of the
    BP-owned Liberty Land rig to drill the Liberty field six miles
    offshore the Alaskan North Slope; and
    We established a new, modern training facility, the Parker
    Drilling Training Center, in Anchorage, Alaska. This facility
    complements our training facility in New Iberia, Louisiana, both
    of which use advanced tools to provide training in a wide range
    of drill rig operations and procedures;  Our
    Competitive Strengths
    Geographically Diverse Operations and
    Assets.
  Outstanding Safety, Planned Maintenance, Inventory Control
    and Training Programs.
 6




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Technological Leadership.
  Strong and Experienced Senior Management
    Team.
  Project
    Management
        Customers
   7




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Competition
            Contracts
     8




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Seasonality
    Insurance
    and Indemnification
    Employees
    December 31,2009


2008International drilling


1,409



1,801Alaska(1)


140



25U.S. Barge Drilling


347



420Rental tools


240



280Project Management and Engineering Services, Construction
    Contracts and Corporate


236



240Total employees


2,372



2,766     (1)
    
    Our employees in Alaska are supporting the business expansion
    into this region. We currently intend to include our Alaska
    operations within the International Drilling segment for
    external reporting purposes as these operations (which include
    severe conditions, extended-reaching drilling, support camp on
    site) reflect more closely the characteristics of our
    international operations than the existing GOM
    U.S.-based
    barge operations.  Environmental
    Considerations
   9




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10




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and/or facility-by-facility
 11




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FINANCIAL
    INFORMATION ABOUT INDUSTRY SEGMENTS AND GEOGRAPHIC
    AREAS
    EXECUTIVE
    OFFICERS
    
    Robert L. Parker Jr., 61, is the executive chairman of
    the board of directors. Mr. Parker joined Parker Drilling
    in 1973 as a contract representative, and was appointed manager
    of U.S. operations and a vice president later in 1973. He
    was elected executive vice president in 1976, and president and
    chief operating officer in 1977. In 1991, he was elected chief
    executive officer, was appointed chairman in 2006, and has
    retained the position of executive chairman since 2009. He has
    been a director since 1973.
    David C. Mannon, 52, is president, chief executive
    officer and member of the board of directors. Mr. Mannon
    joined Parker Drilling in 2004 as senior vice president and
    chief operating officer, was elected president in 2007, and
    chief executive officer and director in 2009. From 2003 to 2004,
    Mr. Mannon held the positions of president and chief
    executive officer of Triton Engineering Services Company
    (Triton), a subsidiary of Noble Drilling. From 1988
    to March 2003 he held various other positions with Triton. From
    1980 through 1988, Mr. Mannon served SEDCO-FOREX, formerly
    SEDCO, as a drilling engineer.
    W. Kirk Brassfield, 54, was elected senior vice president
    and chief financial officer in 2005. Mr. Brassfield joined
    Parker Drilling in 1998 as controller and principal accounting
    officer, and was appointed vice president, finance and
    accounting in 2001. From 1991 through 1998, Mr. Brassfield
    served in various positions, including subsidiary controller and
    director of financial planning of MAPCO Inc., a diversified
    energy company. From 1979 through 1991, Mr. Brassfield
    served at the public accounting firm KPMG.
    Jon-Al Duplantier, 42,joined Parker Drilling in 2009 as
    vice president and general counsel. From 1995 to 2009,
    Mr. Duplantier served in several legal and business roles
    at ConocoPhillips, including senior counsel 
    Exploration and Production, managing counsel 
    Indonesia, executive assistant  Exploration and
    Production, and counsel  Dubai. Prior to joining
    ConocoPhillips, he served as a patent attorney for DuPont from
    1992 to 1995. 12




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
    Denis J. Graham, 60, joined Parker Drilling in 2000 as
    vice president of engineering. Mr. Graham served in a
    variety of positions for Diamond Offshore Drilling Company from
    1979 to 2000, including senior vice president of technical
    services immediately prior to joining Parker Drilling.
    Mr. Graham is a Registered Professional Engineer in the
    State of Texas.
    Michael D. Drennon, 54, joined Parker Drilling in 2005 as
    vice president, operations. From 2000 to 2005, Mr. Drennon
    served as program director for development of company-operated
    discoveries in Angola for BP. Mr. Drennon served in various
    engineering, operations and management assignments from 1977 to
    2000 with Amoco and BP.
    Philip A. Schlom, 45, joined Parker Drilling in 2009 as
    principal accounting officer and corporate controller. From 2008
    to 2009, he held the position of vice president and corporate
    controller for Shared Technologies Inc. From 1997 to 2008,
    Mr. Schlom held several senior financial positions at
    Flowserve Corporation, a leading manufacturer of pumps, valves
    and seals for the energy sector. From 1988 through 1997,
    Mr. Schlom served at the public accounting firm
    PricewaterhouseCoopers.  Other
    Parker Drilling Company Officers
  
    David W. Tucker, 54, treasurer, joined Parker Drilling in
    1978 as a financial analyst and served in various financial and
    accounting positions before being named chief financial officer
    of the Companys wholly-owned subsidiary, Hercules Offshore
    Corporation, in February 1998. Mr. Tucker was named
    treasurer in 1999.
    J. Daniel Chapman, 39, joined Parker Drilling in 2009 as
    chief compliance officer and counsel. Prior to joining Parker
    Drilling, Mr. Chapman was employed by Baker Hughes from
    2002 to 2009 where he served in several legal counsel positions
    including compliance counsel, international trade counsel,
    division counsel (drilling fluids) and, most recently, as its
    global ethics & compliance director. Prior to 2002,
    Mr. Chapman was employed as a securities and merger and
    acquisitions lawyer with the law firms of Freshfields (London)
    and King & Spalding (Atlanta and Houston).  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K http://www.sec.gov.
  ITEM 1A.
    RISK
    FACTORS  Form 10-K,
  Risks
    Related to Our Business
  Continued
    instability in the global economy may result in an extended
    decrease in demand for our drilling rigs and rental tools
    business, which could have a material adverse effect on our
    drilling, project management and engineering services and rental
    tool business.
   13




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Rig
    upgrade, refurbishment and construction projects are subject to
    risks and uncertainties, including delays and cost overruns,
    which could have an adverse impact on our results of operations
    and cash flows.
    
    shortages of equipment or skilled labor;
    unforeseen engineering problems;
    unanticipated change orders;
    work stoppages;
    adverse weather conditions;
    unexpectedly long delivery times for manufactured rig components;
    unanticipated repairs to correct defects in construction not
    covered by warranty;
    failure or delay of third-party equipment vendors or service
    providers;
    unforeseen increases in the cost of equipment, labor and raw
    materials, particularly steel;
    disputes with shipyards and suppliers;
    latent damages or deterioration to hull, equipment and machinery
    in excess of engineering estimates and assumptions;
    financial or other difficulties at shipyards and suppliers;
    loss of revenue associated with downtime to remedy
    malfunctioning equipment not covered by warranty;
    loss of revenue and payments of liquidated damages for downtime
    to perform repairs associated with defects, unanticipated
    equipment refurbishment and delays in commencement of operations;
    unanticipated cost increases; and
    inability to obtain the required permits or approvals, including
    import/export documentation.   14




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Failure
    to retain skilled and experienced personnel could affect our
    operations.
    Our
    ability to service our debt obligations is primarily dependent
    upon our future financial performance.
    
    $411.8 million of long-term debt and $14.6 million of
    additional amount due upon maturity which has been reclassed to
    equity pursuant to the newly adopted accounting for convertible
    debt instruments;
    $12.0 million of current portion of long-term debt;
    $25.1 million of operating lease commitments; and
    $12.7 million of standby letters of credit.      
    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.      
    result in a reduction of our credit rating, which would make it
    more difficult for us to obtain additional financing on
    acceptable terms; 15




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
    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; and
    make us more vulnerable to downturns in our business.  Our
    current operations and future growth may require significant
    additional capital, and the amount of our indebtedness could
    impair our ability to fund our capital
    requirements.
    
    cash on hand;
    funds generated from our operations;
    public offerings or private placements of equity and debt
    securities;
    commercial bank loans;
    capital leases; and
    sales of assets.    Volatile
    oil and natural gas prices impact demand for our drilling and
    related services. A decrease in demand for crude oil and natural
    gas or other factors may reduce demand for our services and
    substantially reduce our profitability or result in our
    incurring losses.
      
    the demand for oil and natural gas;
    the cost of exploring for, producing and delivering oil and
    natural gas;
    expectations regarding future energy prices;
    advances in exploration, development and production technology;
    the adoption or repeal of laws and government regulations, both
    in the United States and other countries; 16




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
    the imposition or lifting of economic sanctions against foreign
    countries;
    the number of ongoing and recently completed rig construction
    projects which may create overcapacity;
    local and worldwide military, political and economic events,
    including events in the oil producing countries in Africa, the
    Middle East, CIS, Southeast Asia and Americas;
    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 worldwide economic activity, which
    affects levels of consumer and industrial demand;
    the rate of discovery of new oil and natural gas reserves;
    the development and use of alternative energy sources; and
    the policies of various governments regarding exploration and
    development of their oil and natural gas reserves.  Certain
    of our contracts are subject to cancellation by our customers
    without penalty with little or no notice.
      We
    rely on a small number of customers, and the loss of a
    significant customer could adversely affect us.
    Contract
    drilling and the rental tools business are highly competitive
    and cyclical, with intense price competition.
     17




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Our
    operations could be adversely affected by terrorism, war, civil
    disturbances, political instability and similar
    events.
    Our
    international operations are also subject to governmental
    regulation and other risks.
    
    inconsistency of foreign laws and governmental regulation;
    expropriation, confiscatory taxation and nationalization of our
    assets;
    increases in governmental royalties;
    import-export quotas or trade barriers;
    hiring and retaining skilled and experienced workers, many of
    whom are represented by foreign labor unions;
    work stoppages;
    damage to our equipment or violence directed at our employees,
    including kidnapping;
    piracy;
    unfavorable changes in foreign monetary and tax policies;
    solicitation by government officials for improper payments or
    other forms of corruption;
    foreign currency fluctuations and restrictions on currency
    repatriation;
    repudiation, nullification, modification or renegotiation of
    contracts; and
    other forms of governmental regulation and economic conditions
    that are beyond our control.  and/or
 18




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and/or
  Inconsistent
    application of foreign tax and other laws may adversely affect
    our operations.
    We are
    subject to hazards customary for drilling operations, which
    could adversely affect our financial performance if we are not
    adequately indemnified or insured.
       19




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Government
    regulations and environmental risks, which reduce our business
    opportunities and increase our operating costs, might worsen in
    the future.
    We are
    regularly involved in litigation, some of which may be
    material.
  Form 10-K
  We are
    currently conducting an investigation into possible violations
    of the Foreign Corrupt Practices Act (FCPA) and
    other laws concerning our international operations. The
    Securities and Exchange Commission and the Department of Justice
    are conducting parallel investigations into possible FCPA
    violations. If we are found to have violated the FCPA or other
    legal requirements, we may be subject to criminal and civil
    penalties and other remedial measures, which could materially
    harm our business, results of operations, financial condition
    and liquidity.
       20




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We are
    subject to laws and regulations concerning our international
    operations, including export restrictions, U.S. economic
    sanctions and other activities that we conduct abroad. We have
    conducted an internal review concerning our compliance with
    these legal requirements and have voluntarily disclosed the
    results of our review to the U.S. government. If we are not
    in compliance with applicable legal requirements, we may be
    subject to civil or criminal penalties and other remedial
    measures, which could materially harm our business, results of
    operations, financial condition and liquidity.
    Risks
    Related to Our Common Stock
  The
    market price of our common stock has fluctuated
    significantly.
    
    the other risk factors described in this
    Form 10-K,
    including changes in oil and natural 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 energy-related
    industries;
    general conditions in the securities markets;
    political instability, terrorism or war; and
    the outcome of pending and future legal proceedings,
    investigations, tax assessments and other claims.  A
    hostile takeover of our company would be
    difficult.
   21




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Risks
    Related to our Debt Securities
  We may
    not be able to repurchase our 9.625% Senior Notes upon a
    change of control.
      We may
    not have sufficient cash to repurchase the
    2.125% Convertible Senior Notes at the option of the holder
    upon a fundamental change or to pay the cash payable upon a
    conversion.
   22




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The
    indenture for our 9.625% Senior Notes and our senior
    secured credit agreement impose significant operating and
    financial restrictions, which may prevent us from capitalizing
    on business opportunities and taking some actions.
    
    make investments and other restricted payments, including
    dividends;
    incur additional indebtedness;
    create liens;
    engage in sale leaseback transactions;
    sell our assets or consolidate or merge with or into other
    companies; and
    engage in transactions with affiliates.    DISCLOSURE
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K Form 10-K,
  
    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 through acquisitions of companies or assets;
    construction or upgrades of rigs and expectations regarding when
    these rigs will commence operations;
    capital expenditures for acquisition of rigs, construction of
    new rigs or major upgrades to existing rigs;
    scheduled delivery of drilling rigs for operation in Alaska
    under the terms of our agreement with BP Exploration (Alaska)
    Inc.;
    entering into joint venture agreements;
    our future liquidity;
    availability and sources of funds to reduce our debt and
    expectations of when debt will be reduced; 23




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
    the outcome of pending or future legal proceedings,
    investigations, tax assessments and other claims;
    the availability of insurance coverage for pending or future
    claims;
    the enforceability of contractual indemnification in relation to
    pending or future claims;
    compliance with covenants under our senior secured credit
    facility and indentures for our senior notes; and
    organic growth of our operations.  Form 10-K,
  
    worldwide economic and business conditions that adversely affect
    market conditions
    and/or the
    cost of doing business;
    our inability to access the credit markets;
    the U.S. economy and the demand for natural gas;
    worldwide demand for oil;
    fluctuations in the market prices of oil and natural gas;
    imposition of unanticipated trade restrictions;
    unanticipated operating hazards and uninsured risks;
    political instability, terrorism or war;
    governmental regulations, including changes in accounting rules
    or tax laws or ability to remit funds to the U.S., that
    adversely affect the cost of doing business;
    changes in the tax laws that would allow double taxation on
    foreign sourced income;
    the outcome of our investigation and the parallel investigations
    by the SEC and the Department of Justice into possible
    violations of U.S. law, including the Foreign Corrupt
    Practices Act;
    contemplated U.S. legislation on carbon emissions;
    potential new employer taxes on U.S. health
    care plans;
    adverse environmental events;
    adverse weather conditions;
    global health concerns;
    changes in the concentration of customer and supplier
    relationships;
    ability of our customers and suppliers to obtain financing for
    their operations;
    unexpected cost increases for new construction and upgrade and
    refurbishment projects;
    delays in obtaining components for capital projects and in
    ongoing operational maintenance and equipment certifications;
    shortages of skilled labor; 24




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
    unanticipated cancellation of contracts by operators;
    breakdown of equipment;
    other operational problems including delays in
    start-up of
    operations;
    changes in competition;
    the effect of litigation and contingencies; and
    other similar factors , some of which are discussed in documents
    referred to or incorporated by reference into this
    Form 10-K
    and our other reports and filings with the SEC.  Form 10-K, Form 10-K
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Land
    Rigs  International
    Drilling Depth Rating in Feet10,000


10,000


OverRegion

or Less


25,000


25,000


TotalAsia Pacific


1



7







8CIS/Africa Middle East






7



3



10Americas






4



5



9Unassigned






1







1Total


1



19



8



28  25




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Barge
    Rigs
    Year Built

Maximumor Last

DrillingInternational

Horsepower

Refurbished

Depth (Feet)Caspian Sea:Rig No. 257


3,000



1999



30,000Mexico:Rig No. 53 B


1,600



2004



20,000     Year Built

Maximumor Last

DrillingU.S.

Horsepower

Refurbished

Depth (Feet)Deep drilling:Rig No. 12 B


1,500



2006



18,000Rig No. 15 B


1,000



2007



15,000Rig No. 50 B


2,000



2006



20,000Rig No. 51 B


2,000



2008



20,000Rig No. 54 B


2,000



2006



25,000Rig No. 55 B


2,000



2001



25,000Rig No. 56 B


2,000



2005



25,000Rig No. 72 B


3,000



2005



30,000Rig No. 76 B


3,000



2009



30,000Rig No. 77 B


3,000



2006



30,000Intermediate drilling:Rig No. 8 B


1,000



2007



14,000Rig No. 20 B


1,000



2005



13,000Rig No. 21 B


1,200



2007



14,000  26




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Year Ended December 31,2009


2008International Land Rig DataRigs available for service(1) :


29.0



28.0Utilization rate of rigs available for service(2):


67
%


79
%Barge Rig DataInternational barge drilling:Rigs available for service(1)


2.0



2.0Utilization rate of rigs available for service(2)


74
%


100
%U.S. barge deep drilling:Rigs available for service(1)


10.0



10.0Utilization rate of rigs available for service(2)


41
%


85
%U.S. barge intermediate drilling:Rigs available for service(1)


3.0



3.0Utilization rate of rigs available for service(2)


25
%


74
%U.S. barge workover and shallow drilling:Rigs available for service(1)


2.0



2.0Utilization rate of rigs available for service(2)


20
%


41
%     (1)
    
    The number of 100 percent-owned rigs available for service
    is determined by calculating the number of days each rig was in
    our fleet and was under contract or available for contract. For
    example, a rig under contract or available for contract for six
    months of a year is 0.5 rigs available for service during such
    year. Our method of computation of rigs available for service
    may not be comparable to other similarly titled measures of
    other companies.(2)
    
    Rig utilization rates are based on a weighted average basis
    assuming 365 days availability for all rigs available for
    service. Rigs acquired or disposed of are treated as added to or
    removed from the rig fleet as of the date of acquisition or
    disposal. Rigs that are in operation or fully or partially
    staffed and on a revenue-producing standby status are considered
    to be utilized. Rigs under contract that generate revenues
    during moves between locations or during mobilization or
    demobilization are also considered to be utilized. Our method of
    computation of rig utilization may not be comparable to other
    similarly titled measures of other companies.  ITEM 3.
    LEGAL
    PROCEEDINGS  Form 10-K,
  ITEM 4.
    RESERVED 27




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    2009

2008Quarter

High

Low

High

LowFirst

$
3.34


$
1.28


$
7.82


$
5.53Second


5.30



1.90



10.17



6.69Third


5.71



3.55



10.18



7.77Fourth


6.39



4.30



7.81



2.46       Unregistered
    Sales of Equity Securities and Use of Proceeds
    Issuer Purchases of Equity SecuritiesTotal Number ofShares Purchased as


Maximum Number ofTotal Number





Part of Publicly


Shares That May yetof Shares


Average Price


Announced Plan or


Be Purchased UnderPeriod

Purchased


Paid per Share


Program


the Plan or ProgramOctober 1-31, 2009


441


$
5.29







N/ANovember 1-30, 2009


441


$
5.25







N/ADecember 1-31, 2009


132


$
4.63







N/ATotal


1,014


$
5.06







N/A    28




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Year Ended December 31,2009(1)

2008(1)(2)

2007(1)

2006(3)

2005(4)(Dollars in thousands, except per share amounts)Income Statement DataTotal revenues

$
752,910


$
829,842


$
654,573


$
586,435


$
531,662Total operating income


39,322



59,180



190,983



143,326



115,123Equity in loss of unconsolidated joint venture, net of tax






(1,105
)


(27,101
)






Other expense


(29,495
)


(28,405
)


(24,141
)


(25,891
)


(44,895
)Income tax (expense) benefit


560



6,942



36,895



(36,409
)


28,584Income from continuing operations


9,267



22,728



102,846



81,026



98,812Net income


9,267



22,728



102,846



81,026



98,883Basic earnings per share:Income from continuing operations

$
0.08


$
0.20


$
0.94


$
0.76


$
1.03Net income

$
0.08


$
0.20


$
0.94


$
0.76


$
1.03Diluted earnings per share:Income from continuing operations

$
0.08


$
0.20


$
0.93


$
0.75


$
1.02Net income

$
0.08


$
0.20


$
0.93


$
0.75


$
1.02Balance Sheet DataCash and cash equivalents

$
108,803


$
172,298


$
60,124


$
92,203


$
60,176Marketable securities














62,920



18,000Property, plant and equipment, net


716,798



675,548



585,888



435,473



355,397Assets held for sale














4,828



Total assets


1,243,086



1,205,720



1,067,173



901,301



801,620Total long-term debt, including current portion of long-term debt


423,831



441,394



349,309



329,368



380,015Stockholders equity


595,899



582,172



549,322



459,099



259,829     (1)
    
    The Company adopted, effective January 1, 2009, newly
    issued accounting guidance regarding, Accounting for
    Convertible Debt Instruments That May Be Settled in Cash Upon
    Conversion, which applies to all convertible debt
    instruments that have a net settlement feature. Such
    convertible debt instruments, by their terms, may be settled
    either wholly or partially in cash upon conversion. This new
    accounting guidance requires issuers of these convertible debt
    instruments to separately account for the liability and equity
    components in a manner reflective of the issuers
    nonconvertible debt borrowing rate. Early adoption was not
    permitted and retroactive application to all periods presented
    was required. We reflected the impact of the new accounting
    guidance during each of the quarterly periods in our respective
    Quarterly Reports on
    Form 10-Q
    filed with the SEC during 2009. The amount reclassified upon
    implementation of $15.8 million to Additional Paid In
    Capital represents the equity component of the proceeds from the
    notes, calculated assuming a 7.25 percent non-convertible
    borrowing rate. The adoption of this accounting guidance
    impacted the historical accounting for the Companys
    $125 million aggregate principal amount of
    2.125% Convertible Senior Notes due 2012 issued on
    July 5, 2007 by requiring adjustments to related interest
    expense, deferred income taxes, long-term debt, and 29




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##### Table of Contents



shareholders equity for 2008 and 2007, which are
    illustrated in the notes to the consolidated financial
    statements.(2)
    
    The 2008 results reflect a $100.3 million charge for
    impairment of goodwill that is described in the notes to the
    consolidated financial statements in Item 8 of this
    Form 10-K.(3)
    
    The 2006 results reflect the reversal of a $12.6 million
    valuation allowance at the end of 2006 as it was no longer
    considered more likely than not under the accounting
    guidance related to accounting for income tax uncertainties and
    the utilization of $5.4 million of net operating losses,
    both related to Louisiana state net operating loss carryforwards.(4)
    
    The 2005 results reflect the reversal of a $71.5 million
    valuation allowance related to federal net operating loss
    carryforwards and other deferred tax assets as our evaluation of
    whether the existing tax uncertainty concluded a tax exposure
    likely no longer existed.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  OVERVIEW
    AND OUTLOOK
  Summary
    Overview
      better-than-breakeven
 30




---



##### Table of Contents



Outlook
             31




---



##### Table of Contents



RESULTS
    OF OPERATIONS
  Year
    Ended December 31, 2009 Compared with Year Ended
    December 31, 2008
      Year Ended December 31,2009


2008(Dollars in thousands)Revenues:International drilling

$
293,337



39
%

$
325,096



39
%U.S. drilling


49,628



6
%


173,633



21
%Rental tools


115,057



15
%


171,554



21
%Project management and engineering services


109,445



15
%


110,147



13
%Construction contract


185,443



25
%


49,412



6
%Total revenues

$
752,910



100
%

$
829,842



100
%Operating gross margin:International drilling gross margin excluding depreciation and
    amortization(1)

$
101,851



35
%

$
93,687



29
%U.S. drilling gross margin excluding depreciation and
    amortization(1)


1,574



3
%


89,202



51
%Rental tools gross margin excluding depreciation and
    amortization(1)


62,317



54
%


104,506



61
%Project management and engineering services gross margin
    excluding depreciation and amortization(1)


23,646



22
%


18,470



17
%Construction contract gross margin excluding depreciation and
    amortization(1)


8,132



4
%


2,597



5
%Depreciation and amortization


(113,975
)






(116,956
)Total operating gross margin(2)


83,545







191,506General and administrative expense


(45,483
)






(34,708
)Impairment of goodwill










(100,315
)Provision for reduction in carrying value of certain assets


(4,646
)






Gain on disposition of assets, net


5,906







2,697Total operating income

$
39,322






$
59,180  32




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##### Table of Contents



(1)
    
    Gross margins, excluding depreciation and amortization, are
    computed as revenues less direct operating expenses, excluding
    depreciation and amortization expense; gross margin percentages
    are computed as gross margin, excluding depreciation and
    amortization, as a percent of revenues. The gross margin
    amounts, excluding depreciation and amortization, and gross
    margin percentages should not be used as a substitute for those
    amounts reported under accounting principles generally accepted
    in the United States (GAAP). However, we monitor our
    business segments based on several criteria, including gross
    margin. Management believes that this information is useful to
    our investors because it more accurately reflects cash generated
    by segment. Such gross margin amounts are reconciled to our most
    comparable GAAP measure as follows:  ProjectManagementInternational








& Engineering


ConstructionDrilling


U.S. Drilling


Rental Tools


Services


Contract(Dollars in thousands)Year Ended December 31, 2009Operating gross margin(2)

$
50,723


$
(26,797
)

$
27,841


$
23,646


$
8,132Depreciation and amortization


51,128



28,371



34,476







Operating gross margin excluding depreciation and amortization

$
101,851


$
1,574


$
62,317


$
23,646


$
8,132Year Ended December 31, 2008Operating gross margin(2)

$
41,786


$
53,964


$
74,689


$
18,470


$
2,597Depreciation and amortization


51,901



35,238



29,817







Operating gross margin excluding depreciation and amortization

$
93,687


$
89,202


$
104,506


$
18,470


$
2,597   (2)
    
    Operating gross margin is calculated as revenues less direct
    operating expenses, including depreciation and amortization
    expense.  International
    Drilling Segment
         33




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##### Table of Contents



U.S.
    Drilling Segment
      Rental
    Tools Segment
      Project
    Management and Engineering Services Segment
    Construction
    Contract Segment
    costs-to-date
  Other
    Financial Data
   34




---



##### Table of Contents



Year
    Ended December 31, 2008 Compared with Year Ended
    December 31, 2007
     35




---



##### Table of Contents



Year Ended December 31,2008


2007(Dollars in thousands)Revenues:International drilling

$
325,096



39
%

$
213,566



33
%U.S. drilling


173,633



21
%


225,263



34
%Rental tools


171,554



21
%


138,031



21
%Project management and engineering services


110,147



13
%


77,713



12
%Construction contract


49,412



6
%


Total revenues

$
829,842



100
%

$
654,573



100
%Operating gross margin:International drilling gross margin excluding depreciation and
    amortization(1)

$
93,687



29
%

$
59,227



28
%U.S. drilling gross margin excluding depreciation and
    amortization(1)


89,202



51
%


130,911



58
%Rental tools gross margin excluding depreciation and
    amortization(1)


104,506



61
%


83,654



61
%Project management and engineering services gross margin
    excluding depreciation and amortization(1)


18,470



17
%


12,732



16
%Construction contract gross margin excluding depreciation and
    amortization(1)


2,597



5
%


Depreciation and amortization


(116,956
)






(85,803
)Total operating gross margin(2)


191,506







200,721General and administrative expense


(34,708
)






(24,708
)Impairment of goodwill


(100,315
)Provision for reduction in carrying value of certain assets










(1,462
)Gain on disposition of assets, net


2,697







16,432Total operating income

$
59,180






$
190,983     (1)
    
    Gross margins, excluding depreciation and amortization, are
    computed as revenues less direct operating expenses, excluding
    depreciation and amortization expense; gross margin percentages
    are computed as gross margin, excluding depreciation and
    amortization, as a percent of revenues. The gross margin
    amounts, excluding depreciation and amortization, and gross
    margin percentages should not be used as a substitute for those
    amounts reported under GAAP. However, we monitor our business
    segments based on several criteria, including gross margin.
    Management believes that this information is useful to our
    investors because it more 36




---



##### Table of Contents



accurately reflects cash generated by segment. Such gross margin
    amounts are reconciled to our most comparable GAAP measure as
    follows:  ProjectManagementInternational








& Engineering


ConstructionDrilling


U.S. Drilling


Rental Tools


Services


Contract(Dollars in thousands)Year Ended December 31, 2008Operating gross margin(2)

$
41,786


$
53,964


$
74,689


$
18,470


$
2,597Depreciation and amortization


51,901



35,238



29,817







Operating gross margin excluding depreciation and amortization

$
93,687


$
89,202


$
104,506


$
18,470


$
2,597Year Ended December 31, 2007Operating gross margin(2)

$
31,046


$
97,679


$
59,264


$
12,732


$
Depreciation and amortization


28,181



33,232



24,390







Operating gross margin excluding depreciation and amortization

$
59,227


$
130,911


$
83,654


$
12,732


$
   (2)
    
    Operating gross margin is calculated as revenues less direct
    operating expenses, including depreciation and amortization
    expense.  International
    Drilling Segment
         37




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##### Table of Contents



U.S.
    Drilling Segment
      Rental
    Tools Segment
      Project
    Management and Engineering Services Segment
    Construction
    Contract Segment
  costs-to-date
  Other
    Financial Data
   38




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##### Table of Contents



variable-to-fixed mark-to-market
    LIQUIDITY
    AND CAPITAL RESOURCES
  Liquidity
    2009

2008

2007(Dollars in thousands)Operating Activities

$
110,872


$
220,318


$
74,276Investing activities


(150,718
)


(196,607
)


(152,889
)Financing activities


(23,649
)


88,463



46,534Net change in cash and cash equivalents


(63,495
)


112,174



(32,079
)   Operating
    Activities
      Investing
    Activities
   39




---



##### Table of Contents



Financing
    Activities
      2008
    Credit Facility
     40




---



##### Table of Contents



2.125% Convertible
    Senior Notes
  Accounting
    for Convertible Debt Instruments That May Be Settled in Cash
    Upon Conversion
      
    Notes Conversion Feature The initial conversion
    price for Note holders to convert their notes into shares is at
    a common stock share price equivalent of $13.85
    (77.2217 shares of common) stock per $1,000 note value.
    Conversion rate adjustments occur for any issuances of stock,
    warrants, rights or options (except for stock purchase plans or
    dividend re-investments) or any other transfer of benefit to
    substantially all stockholders, or as a result of a tender or
    exchange offer. The Company may, under advice of our Board of
    Directors, increase the conversion rate at our sole discretion
    for a period of at least 20 days.
    Notes Settlement Feature Upon tender of the Notes
    for conversion, the Company can either settle entirely in shares
    of common stock or a combination of cash and shares of common
    stock, solely at our option. The Companys intent is to
    satisfy our conversion obligation for our Notes in cash, rather
    than in common stock, for at least the aggregate principal
    amount of the Notes. This reduced the resulting potential
    earnings dilution to only include any possible conversion
    premium, which would be the difference between the average price
    of our shares and the conversion price per share of common stock.
    Contingent Conversion Feature Note holders may
    only convert Notes when either sales price or trading price
    conditions are met, on or after the Notes due date or upon
    certain accounting changes or certain corporate transactions
    (fundamental changes) involving stock distributions. Make-whole
    provisions are only included in the accounting and fundamental
    change conversions such that holders do not lose value as a
    result of the changes.
    Settlement Feature Upon conversion, we will pay
    shares of our cash and common stock if any, based on a daily
    conversion rate multiplied by a volume weighted average price of
    our common stock during a specified period following the
    conversion date. Conversions can be settled in cash or shares,
    solely at our discretion.    and/or
   41




---



##### Table of Contents



2007
    Credit Facility
    Other
    Liquidity
    
    $125.0 million aggregate principal amount of
    2.125% Convertible Senior Notes due July 15, 2012,
    less an associated $14.6 million in unamortized debt
    discount;
    $225.0 million aggregate principal amount of
    9.625% Senior Notes, due October 1, 2013 plus an
    associated $2.4 million in unamortized debt
    premium; and
    $86.0 million drawn against our 2008 Credit Facility,
    including $42.0 million under our Revolving Credit Facility
    and $44.0 million under our Term Loan Facility,
    $12.0 million of which is classified as current.   42




---



##### Table of Contents



Payment Due by PeriodLess Than


Years


Years


More ThanTotal


1 Year


2-3


4-5


5 Years(Dollars in thousands)Contractual cash obligations:Long-term debt  principal(1)

$
394,000


$
12,000


$
149,000


$
233,000


$
Long-term debt  interest(1)


95,251



26,976



51,464



16,811



Operating leases(2)


25,062



6,438



5,394



3,328



9,902Purchase commitments(3)


68,716



68,716











Total contractual obligations

$
583,029


$
114,130


$
205,858


$
253,139


$
9,902Commercial commitments:Long-term debt Revolving credit facility(4)

$
42,000


$



$



$
42,000


$
Standby letters of credit(4)


12,732



12,732











Total commercial commitments

$
54,732


$
12,732


$



$
42,000


$
     (1)
    
    Long-term debt includes the principal and interest cash
    obligations of the 9.625% Senior Notes and the
    2.125% Convertible Senior Notes. The remaining unamortized
    premium of $2.4 million and unamortized discount of
    $14.6 million are not included in the contractual cash
    obligations schedule.(2)
    
    Operating leases consist of lease agreements in excess of one
    year for office space, equipment, vehicles and personal property.(3)
    
    We have purchase commitments outstanding as of December 31,
    2009, related to rig upgrade projects and new rig construction.(4)
    
    We have an $80.0 million revolving credit facility. As of
    December 31, 2009, $42.0 million has been drawn down
    and $12.7 million of availability has been used to support
    letters of credit that have been issued, resulting in an
    estimated $25.3 million of availability. The revolving
    credit facility expires May 14, 2013.  variable-to-fixed
    OTHER
    MATTERS
  Business
    Risks
    Critical
    Accounting Policies
   43




---



##### Table of Contents



and/or
  Impairment of Property, Plant and
    Equipment.
    Insurance Reserves.
   44




---



##### Table of Contents



Accounting for Income Taxes.
        Revenue Recognition. cost-to-cost
  Recent
    Accounting Pronouncements
  Consolidation
 45




---



##### Table of Contents



Fair Value Measurements and Disclosures
      Subsequent Events
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Exchange Risk
    Interest
    Rate Risk
   46




---



##### Table of Contents



variable-to-fixed mark-to-market
 47




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Internal Control  Integrated Framework Controls and Procedures
         48




---



##### Table of Contents



Internal Control  Integrated Framework
    KPMG
    LLP
    49




---



##### Table of Contents



PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF
    OPERATIONS
  Year Ended December 31,2009


2008


2007(Dollars in thousands, except per share data)Revenues:International drilling

$
293,337


$
325,096


$
213,566U.S. drilling


49,628



173,633



225,263Rental tools


115,057



171,554



138,031Project management and engineering services


109,445



110,147



77,713Construction contract


185,443



49,412



Total revenues


752,910



829,842



654,573Operating expenses:International drilling


191,486



231,409



154,339U.S. drilling


48,054



84,431



94,352Rental tools


52,740



67,048



54,377Project management and engineering services


85,799



91,677



64,981Construction contract


177,311



46,815



Depreciation and amortization


113,975



116,956



85,803Total operating expenses


669,365



638,336



453,852Total operating gross margin


83,545



191,506



200,721General and administration expense


(45,483
)


(34,708
)


(24,708
)Impairment of goodwill






(100,315
)


Provision for reduction in carrying value of certain assets


(4,646
)






(1,462
)Gain on disposition of assets, net


5,906



2,697



16,432Total operating income


39,322



59,180



190,983Other income and (expense):Interest expense


(29,450
)


(29,266
)


(27,217
)Change in fair value of derivative positions










(671
)Interest income


1,041



1,405



6,478Loss on extinguishment of debt










(2,396
)Equity in loss of unconsolidated joint venture, net of taxes






(1,105
)


(27,101
)Minority interest










(1,000
)Other


(1,086
)


(544
)


665Total other income and (expense)


(29,495
)


(29,510
)


(51,242
)Income before income taxes


9,827



29,670



139,741Income tax expense (benefit):Current tax expense (benefit)


15,424



(1,539
)


17,602Deferred tax expense (benefit)


(14,864
)


8,481



19,293Total income tax expense


560



6,942



36,895Net income

$
9,267


$
22,728


$
102,846Basic earnings per share:

$
0.08


$
0.20


$
0.94Diluted earnings per share:

$
0.08


$
0.20


$
0.93Number of common shares used in computing earnings per share:Basic


113,000,555



111,400,396



109,542,364Diluted


114,925,446



112,430,545



110,856,694    50




---



##### Table of Contents



PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEET
  December 31,2009


2008(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
108,803


$
172,298Accounts and notes receivable, net of allowance for bad debts of
    $4,095 in 2009 and $3,169 in 2008


188,687



186,164Rig materials and supplies


31,633



30,241Deferred costs


4,531



7,804Deferred income taxes


9,650



9,735Other tax assets


37,818



40,924Other current assets


62,407



26,125Total current assets


443,529



473,291Property, plant and equipment, at cost:Drilling equipment


1,004,920



960,472Rental tools


232,559



210,151Buildings, land and improvements


30,548



27,340Other


50,847



45,552Construction in progress


211,889



144,7211,530,763



1,388,236Less accumulated depreciation and amortization


813,965



712,688Property, plant and equipment, net


716,798



675,548Other assets:Rig materials and supplies


9,291



7,219Debt issuance costs


5,406



7,285Deferred income taxes


55,749



22,956Other assets


12,313



19,421Total other assets


82,759



56,881Total assets

$
1,243,086


$
1,205,720LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
12,000


$
6,000Accounts payable


95,207



77,814Accrued liabilities


72,703



62,584Accrued income taxes


9,126



12,130Total current liabilities


189,036



158,528Long-term debt


411,831



435,394Other long-term liabilities


30,246



21,396Long-term deferred tax liability


16,074



8,230Commitments and contingencies (Note 13)






Stockholders equity:Preferred stock, $1 par value, 1,942,000 shares
    authorized, no shares outstanding






Common stock,
    $0.162/3
    par value, authorized 280,000,000 shares, issued and
    outstanding 116,239,097 shares (113,456,476 shares in
    2008)


19,374



18,910Capital in excess of par value


623,557



619,561Accumulated deficit


(47,032
)


(56,299
)Total stockholders equity


595,899



582,172Total liabilities and stockholders equity

$
1,243,086


$
1,205,720    51




---



##### Table of Contents



PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF CASH
    FLOWS
  Year Ended December 31,2009


2008


2007(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
9,267


$
22,728


$
102,846Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


113,975



116,956



85,803Impairment of goodwill






100,315



Loss on extinguishment of debt










1,396Gain on disposition of assets


(5,906
)


(2,697
)


(16,432
)Provision for reduction in carrying value of certain assets


4,646







1,462Deferred tax expense


(14,864
)


8,481



19,293Equity loss in unconsolidated joint venture






1,105



27,101Expenses not requiring cash


11,626



15,333



13,502Change in assets and liabilities:Accounts and notes receivable


1,656



(14,958
)


(60,209
)Rig materials and supplies


(3,464
)


(11,271
)


(4,945
)Other current assets


(29,903
)


(15,737
)


(12,720
)Accounts payable and accrued liabilities


29,735



(238
)


(19,728
)Accrued income taxes


(13,004
)


(2,404
)


(48,998
)Other assets


7,108



2,705



(14,095
)Net cash provided by operating activities


110,872



220,318



74,276CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures


(160,054
)


(197,070
)


(242,098
)Proceeds from the sale of assets


9,336



4,512



23,445Proceeds from insurance claims






951



7,844Investment in unconsolidated joint venture






(5,000
)


(5,000
)Purchase of marketable securities










(101,075
)Proceeds from sale of marketable securities










163,995Net cash used in investing activities


(150,718
)


(196,607
)


(152,889
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from term note facility draw





$
50,000


$
125,000Paydown on revolver credit facility


(20,000
)


(35,000
)


(100,000
)Paydown on term note


(6,000
)






Proceeds from revolver draw


4,000



73,000



20,000Purchase of call options










(31,475
)Sale of common stock warrants










20,250Payment of debt issuance costs






(1,846
)


(4,618
)Proceeds from stock options exercised


199



1,969



15,455Excess tax benefit (expense) from stock-based compensation


(1,848
)


340



1,922Net cash provided by (used in) financing activities


(23,649
)


88,463



46,534Net increase (decrease) in cash and cash equivalents


(63,495
)


112,174



(32,079
)Cash and cash equivalents at beginning of year


172,298



60,124



92,203Cash and cash equivalents at end of year

$
108,803


$
172,298


$
60,124Supplemental disclosures of cash flow information:Cash paid during the year for:Interest

$
28,721


$
27,192


$
27,439Income taxes

$
17,462


$
45,615


$
74,801    52




---



##### Table of Contents



PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF STOCKHOLDERS
    EQUITY
  Capital inCommon


Excess of


AccumulatedShares


Stock


Par Value


Deficit(Dollars and shares in thousands)Balances, December 31, 2006


109,150


$
18,220


$
568,253


$
(127,374
)Activity in employees stock plans


2,766



433



14,931



Purchase of call options on Convertible Notes










(31,475
)


Sale of warrants on Convertible Notes










20,250



OID premium deferred tax asset reclass










12,149



Adoption of FIN 48














(54,499
)Excess tax benefit from stock based compensation










1,922



Amortization of restricted stock plan compensation










7,836



Adjustment-Adoption of Convertible Debt (ASC470)










15,830



Net income (total comprehensive income of $102,846)














102,846Balances, December 31, 2007


111,916


$
18,653


$
609,696


$
(79,027
)Activity in employees stock plans


1,540



257



2,895



Excess tax benefit from stock based compensation










340



Amortization of restricted stock plan compensation










6,630



Net income (total comprehensive income of $22,728)














22,728Balances, December 31, 2008


113,456


$
18,910


$
619,561


$
(56,299
)Activity in employees stock plans


2,783



464



1,483



Tax Loss from stock based compensation










(1,848
)


Amortization of restricted stock plan compensation










4,361



Net income (total comprehensive income of $9,267)














9,267Balances, December 31, 2009


116,239


$
19,374


$
623,557


$
(47,032
)    53




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS  Note 1 
    Summary
    of Significant Accounting Policies  Nature of Operations 
  Application of Accounting for Convertible Debt Instruments
    That May Be Settled in Cash upon Conversion (Including Partial
    Cash Settlement) 
  Originally Reported





As AdjustedBalance Sheet

December 31, 2008


Adjustments


December 31, 2008(Dollars in thousands)ASSETSDeferred income taxes

$
30,867


$
(7,911
)

$
22,956Total assets

$
1,213,631






$
1,205,720LIABILITIES AND STOCKHOLDERS EQUITYLong-term debt

$
455,073


$
(19,679
)

$
435,394Capital in excess of par


603,731



15,830



619,561Accumulated deficit


(52,237
)


(4,062
)


(56,299
)Total liabilities and stockholders equity

$
1,213,631






$
1,205,720   54




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Originally Reported





As AdjustedDecember 31, 2007


Adjustments


December 31, 2007ASSETSDeferred income taxes

$
40,121


$
(9,814
)

$
30,307Total assets

$
1,076,987






$
1,067,173LIABILITIES AND STOCKHOLDERS EQUITYLong-term debt

$
353,721


$
(24,412
)

$
329,309Capital in excess of par


593,866



15,830



609,696Accumulated deficit


(77,795
)


(1,232
)


(79,027
)Total liabilities and stockholders equity

$
1,076,987






$
1,067,173   Originally Reported





As AdjustedTwelve Months Ended





Twelve Months EndedStatement of Operations

December 31, 2008


Adjustments


December 31, 2008(Dollars in thousands)Other expense:Interest expense

$
(24,533
)

$
(4,733
)

$
(29,266
)Income tax expense:Deferred


10,384



(1,903
)


8,481Net income

$
25,558






$
22,728   Originally Reported





As AdjustedTwelve Months Ended





Twelve Months EndedDecember 31, 2007


Adjustments


December 31, 2007Other expense:Interest expense

$
(25,157
)

$
(2,060
)

$
(27,217
)Income tax expense:Deferred


20,121



(828
)


19,293Net income

$
104,078






$
102,846   Consolidation
    Use of Estimates
 55




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Drilling Contracts and Rental Revenues
  Construction Contract cost-to-cost
  Reimbursable Costs out-of-pocket out-of-pocket
  Cash and Cash Equivalents
  Accounts Receivable and Allowance for Doubtful Accounts
    December 31,2009


2008(Dollars in thousands)Trade

$
192,740


$
189,266Employee(1)


42



67Allowance for doubtful accounts(2)


(4,095
)


(3,169
)Total receivables

$
188,687


$
186,164     (1)
    
    Employee receivables related to cash advances for business
    expenses and travel.(2)
    
    Additional information on the allowance for doubtful accounts
    for the years ended December 31, 2009, 2008 and 2007 are
    reported on Schedule II  Valuation and
    Qualifying Accounts. 56




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Property, Plant and Equipment
  Land drilling equipment

15 to 20 yearsBarge drilling equipment

3 to 20 yearsDrill pipe, rental tools and other

4 to 7 yearsBuildings and improvements

10 to 20 years         Goodwill
  Rig Materials and Supplies
  Deferred Costs
  Debt Issuance Costs
  Income Taxes
 57




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Earnings (Loss) Per Share (EPS)
  Concentrations of Credit Risk
      Fair Value of Financial Instruments
  Stock-Based Compensation 
    Note 2 
    Disposition
    of Assets  Disposition of Assets
 58




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 3 
    Goodwill    Note 4 
    Long-Term
    Debt      December 31,2009


2008(Dollars in thousands)Convertible Senior Notes payable in July 2012 with interest at
    2.125% payable semi-annually in January and July, net of
    unamortized discount of $14,596 at December 31, 2009 and
    $19,679 at December 31, 2008

$
110,404


$
105,321Senior Notes payable in October 2013 with interest at 9.625%
    payable semi-annually in April and October net of unamortized
    premium of $2,427 at December 31, 2009 and $3,073 at
    December 31, 2008. (Effective interest rate of 9.24% at
    December 31, 2009 and December 31, 2008)


227,427



228,073Term Note which began amortizing September 30, 2009 at
    equal installments of $3.0 million per quarter with
    interest at prime, plus an applicable margin or LIBOR, plus an
    applicable margin. (Effective interest rate of 3.48% at
    December 31, 2009)


44,000



50,000Revolving Credit Facility with interest at prime, plus an
    applicable margin or LIBOR, plus an applicable margin.
    (Effective interest rate of 2.98% at December 31, 2009)


42,000



58,000Total debt


423,831



441,394Less current portion


12,000



6,000Total long-term debt

$
411,831


$
435,394     
    2010  $12.0 million
    2011  $12.0 million
    2012  $137.0 million
    2013  $275.0 million  Activity in 2009 
   59




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Activity in 2008 
    Activity in 2007 
    
    Notes Conversion Feature The initial conversion
    price for Note holders to convert their Notes into shares is at
    a common stock share price equivalent of $13.85
    (77.2217 shares of common) stock per $1,000 note value.
    Conversion rate adjustments occur for any issuances of stock,
    warrants, rights or options (except for stock purchase plans or
    dividend re-investments) or any other transfer of benefit to
    substantially all stockholders, or as a result of a tender or
    exchange offer. The Company may, under advice of its Board of
    Directors, increase the conversion rate at its sole discretion
    for a period of at least 20 days.
    Notes Settlement Feature Upon tender of the notes
    for conversion, the Company can either settle entirely in shares
    or a combination of cash and shares, solely at the
    Companys option. The Companys policy is to satisfy
    its conversion obligation for the notes in cash,
    rather than in common stock, for at least the aggregate
    principal amount of the notes. This reduced the resulting
    potential earnings dilution to only include any possible
    conversion premium, which would be the difference between the
    average price of the shares and the conversion price per share
    of common stock. 60




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Contingent Conversion Feature Note holders may
    only convert notes into shares when either sales price or
    trading price conditions are met, on or after the notes
    due date or upon certain accounting changes or certain corporate
    transactions (fundamental changes) involving stock
    distributions. Make-whole provisions are only included in the
    accounting and fundamental change conversions such that holders
    do not lose value as a result of the changes.
    Settlement Feature Upon conversion, we will pay
    cash and shares of our common stock, if any, based on a daily
    conversion rate multiplied by a volume weighted average price of
    our common stock during a specified period following the
    conversion date. Conversions can be settled in cash or shares,
    solely at our discretion.    and/or
            Note 5 
    Guarantor/Non-Guarantor
    Consolidating Condensed Financial Statements   61




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Rule 3-10(a)(1) Regulation S-X, sub-paragraph
   62




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED STATEMENT OF OPERATIONS
  Year Ended December 31, 2009Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in thousands)Total revenues

$



$
570,742


$
240,833


$
(58,665
)

$
752,910Operating expenses






431,453



182,602



(58,665
)


555,390Depreciation and amortization






83,728



30,247







113,975Total operating gross margin






55,561



27,984







83,545General and administration expense(1)


(180
)


(45,245
)


(58
)






(45,483
)Provision for reduction in carrying value of certain assets






(4,646
)










(4,646
)Gain on disposition of assets, net






5,572



334







5,906Total operating income (loss)


(180
)


11,242



28,260







39,322Other income and (expense):Interest expense


(33,203
)


(46,679
)


(3,118
)


53,550



(29,450
)Interest income


43,183



8,391



9,378



(59,911
)


1,041Other


(3
)


818



(1,901
)






(1,086
)Equity in net earnings of subsidiaries


(36,412
)










36,412



Total other income and (expense)


(26,435
)


(37,470
)


4,359



30,051



(29,495
)Income (loss) before income taxes


(26,615
)


(26,228
)


32,619



30,051



9,827Income tax expense (benefit):Current


(17,407
)


25,032



7,799







15,424Deferred


(18,475
)


3,112



499







(14,864
)Total income tax expense (benefit)


(35,882
)


28,144



8,298







560Net income (loss)

$
9,267


$
(54,372
)

$
24,321


$
30,051


$
9,267     (1)
    
    All field operations general and administration expenses are
    included in operating expenses. 63




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED STATEMENT OF OPERATIONS
  Twelve Months Ended December 31, 2008Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in Thousands)Total revenues

$



$
638,883


$
312,015


$
(121,056
)

$
829,842Operating expenses


2



376,759



265,675



(121,056
)


521,380Depreciation and amortization






85,617



31,339







116,956Total operating gross margin


(2
)


176,507



15,001







191,506General and administration expense(1)


(204
)


(34,466
)


(38
)






(34,708
)Impairment of goodwill






(100,315
)










(100,315
)Gain on disposition of assets, net






1,860



837







2,697Total operating income (loss)


(206
)


43,586



15,800







59,180Other income and (expense):Interest expense


(33,990
)


(47,178
)


(308
)


52,210



(29,266
)Changes in fair value of derivative positions


















Interest income


42,575



7,577



3,463



(52,210
)


1,405Equity in loss of unconsolidated joint venture, net of taxes






(1,105
)










(1,105
)Other


(2
)


(776
)


234







(544
)Equity in net earnings of subsidiaries


(8,037
)










8,037



Total other income and (expense)


546



(41,482
)


3,389



8,037



(29,510
)Income (benefit) before income taxes


340



2,104



19,189



8,037



29,670Income tax expense (benefit):Current


(25,850
)


12,432



11,879







(1,539
)Deferred


3,462



4,833



186







8,481Total income tax expense (benefit)


(22,388
)


17,265



12,065







6,942Net income (loss)

$
22,728


$
(15,161
)

$
7,124


$
8,037


$
22,728     (1)
    
    All field operations general and administration expenses are
    included in operating expenses. 64




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED STATEMENT OF OPERATIONS
  Year Ended December 31, 2007Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in thousands)Revenues

$



$
573,164


$
136,319


$
(54,910
)

$
654,573Operating expenses


1



311,867



111,091



(54,910
)


368,049Depreciation and amortization






77,204



8,599







85,803Operating gross margin


(1
)


184,093



16,629







200,721General and administration expense(1)


(165
)


(24,485
)


(58
)






(24,708
)Provision for reduction in carryingvalue of certain assets






(1,462
)










(1,462
)Gain (loss) on disposition of assets, net






16,448



(16
)






16,432Total operating income (loss)


(166
)


174,594



16,555







190,983Other income and (expense):Interest expense


(31,978
)


(47,183
)


(551
)


52,495



(27,217
)Changes in fair value of derivative positions


(671
)














(671
)Interest income


47,435



11,878



(340
)


(52,495
)


6,478Loss on extinguishment of debt


(2,396
)














(2,396
)Equity in loss of unconsolidated joint venture, net of taxes










(27,101
)






(27,101
)Minority interest










(1,000
)






(1,000
)Other


9



618



44



(6
)


665Equity in net earnings of subsidiaries


101,432











(101,432
)


Total other income and (expense)


113,831



(34,687
)


(28,948
)


(101,438
)


(51,242
)Income (loss) before income taxes


113,665



139,907



(12,393
)


(101,438
)


139,741Income tax expense (benefit):Current


(4,237
)


16,217



5,622







17,602Deferred


15,056



2,626



1,611







19,293Income tax expense


10,819



18,843



7,233







36,895Net income (loss)

$
102,846


$
121,064


$
(19,626
)

$
(101,438
)

$
102,846     (1)
    
    All field operations general and administration expenses are
    included in operating expenses. 65




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED BALANCE SHEET
  December 31, 2009Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
58,189


$
3,683


$
46,931


$



$
108,803Accounts and notes receivable, net


17,357



219,237



117,066



(164,973
)


188,687Rig materials and supplies






10,914



20,719







31,633Deferred costs






2,221



2,310







4,531Deferred income taxes


9,650















9,650Other tax assets


96,450



(57,534
)


(1,098
)






37,818Other current assets


557



49,347



23,250



(10,747
)


62,407Total current assets


182,203



227,868



209,178



(175,720
)


443,529Property, plant and equipment, net


79



521,793



194,802



124



716,798Investment in subsidiaries and intercompany advances


903,616



898,949



80,472



(1,883,037
)


Investment in and advances to unconsolidated joint venture






4,620



(4,620
)






Other noncurrent assets


56,658



20,905



13,296



(8,100
)


82,759Total assets

$
1,142,556


$
1,674,135


$
493,128


$
(2,066,733
)

$
1,243,086LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
12,000


$



$



$



$
12,000Accounts payable and accrued liabilities


50,583



387,246



95,797



(365,716
)


167,910Accrued income taxes


1,069



2,372



5,685







9,126Total current liabilities


63,652



389,618



101,482



(365,716
)


189,036Long-term debt


411,831















411,831Other long-term liabilities


9,692



14,646



6,127



(219
)


30,246Long-term deferred tax liability


(1,098
)


13,178



3,994







16,074Intercompany payables


62,583



586,636



42,003



(691,222
)


Contingencies


















Stockholders equity:Common stock


19,374



39,899



21,153



(61,052
)


19,374Capital in excess of par value


623,554



997,082



256,395



(1,253,474
)


623,557Retained earnings (accumulated deficit)


(47,032
)


(366,924
)


61,974



304,950



(47,032
)Total stockholders equity


595,896



670,057



339,522



(1,009,576
)


595,899Total liabilities and stockholders equity

$
1,142,556


$
1,674,135


$
493,128


$
(2,066,733
)

$
1,243,086  66




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED BALANCE SHEET
  December 31, 2008Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in Thousands)ASSETSCurrent assets:Cash and cash equivalents

$
111,324


$
9,741


$
51,233


$



$
172,298Accounts and notes receivable, net


51,792



217,435



131,591



(214,654
)


186,164Rig materials and supplies






11,518



18,723







30,241Deferred costs






2,000



5,804







7,804Deferred income taxes


9,735















9,735Other tax assets


83,788



(41,008
)


(1,856
)






40,924Other current assets


549



13,755



11,875



(54
)


26,125Total current assets


257,188



213,441



217,370



(214,708
)


473,291Property, plant and equipment, net


79



465,659



209,686



124



675,548Investment in subsidiaries and intercompany advances


867,684



1,066,216



(88,992
)


(1,844,908
)


Investment in and advances to unconsolidated joint venture






4,620



(4,620
)






Other noncurrent assets


27,607



21,215



8,059







56,881Total assets

$
1,152,558


$
1,771,151


$
341,503


$
(2,059,492
)

$
1,205,720LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
6,000


$



$



$



$
6,000Accounts payable and accrued liabilities


53,859



337,464



100,305



(351,230
)


140,398Accrued income taxes


540



4,861



6,729







12,130Total current liabilities


60,399



342,325



107,034



(351,230
)


158,528Long-term debt


435,394















435,394Other long-term liabilities


10



14,351



7,035







21,396Long-term deferred tax liability






1,237



6,993







8,230Intercompany payables


74,583



583,027



71,299



(728,909
)


Contingencies


















Stockholders equity:Common stock


18,910



39,899



21,153



(61,052
)


18,910Capital in excess of par value


619,561



1,045,727



141,112



(1,186,839
)


619,561Retained earnings (accumulated deficit)


(56,299
)


(255,415
)


(13,123
)


268,538



(56,299
)Total stockholders equity


582,172



830,211



149,142



(979,353
)


582,172Total liabilities and stockholders equity

$
1,152,558


$
1,771,151


$
341,503


$
(2,059,492
)

$
1,205,720  67




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED STATEMENT OF CASH FLOWS
  Year Ended December 31, 2009Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in thousands)Cash flows from operating activities:Net income (loss)

$
9,267


$
(54,373
)

$
24,322


$
30,051


$
9,267Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization






83,728



30,247







113,975Gain on disposition of assets






(5,572
)


(334
)






(5,906
)Deferred tax expense (benefit)


(18,475
)


3,112



499







(14,864
)Provision for reduction in carrying value of certain assets






4,646











4,646Expenses not requiring cash


11,626















11,626Equity in net earnings of subsidiaries


36,412











(36,412
)


Change in accounts receivable


34,435



(47,304
)


14,525







1,656Change in other assets


(35,604
)


25,082



(15,737
)






(26,259
)Change in liabilities


17,203



9,128



(9,600
)






16,731Net cash provided by (used in) operating activities


54,864



18,447



43,922



(6,361
)


110,872Cash flows from investing activities:Capital expenditures






(144,184
)


(15,870
)






(160,054
)Proceeds from the sale of assets






9,098



238







9,336Intercompany dividend payments










(6,361
)


6,361



Net cash provided by (used in) investing activities






(135,086
)


(21,993
)


6,361



(150,718
)Cash flows from financing activities:Proceeds from draw on revolver credit facility


4,000















4,000Paydown on revolver credit facility


(26,000
)














(26,000
)Proceeds from stock options exercised


199















199Excess tax cost from stock-based compensation


(1,848
)














(1,848
)Intercompany advances, net


(84,350
)


110,582



(26,232
)






Net cash provided by (used in) financing activities


(107,999
)


110,582



(26,232
)






(23,649
)Net increase (decrease) in cash and cash equivalents


(53,135
)


(6,057
)


(4,303
)






(63,495
)Cash and cash equivalents at beginning of year


111,324



9,741



51,233







172,298Cash and cash equivalents at end of period

$
58,189


$
3,683


$
46,931


$



$
108,803  68




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED STATEMENT OF CASH FLOWS
  Twelve months ending December 31, 2008Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in thousands)Cash flows from operating activities:Net income (loss)

$
22,728


$
(15,161
)

$
7,124


$
8,037


$
22,728Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization






85,617



31,339







116,956Impairment of goodwill






100,315











100,315Amortization of debt issuance and premium


1,237















1,237Gain on disposition of assets






(1,860
)


(837
)






(2,697
)Deferred tax expense


3,462



4,833



186







8,481Equity in loss of unconsolidated joint venture






1,105











1,105Expenses not requiring cash


14,096















14,096Equity in net earnings of subsidiaries


8,037











(8,037
)


Change in accounts receivable


27,895



9,550



(52,403
)






(14,958
)Change in other assets


(36,459
)


16,044



(3,888
)






(24,303
)Change in liabilities


13,013



(51,295
)


35,640







(2,642
)Net cash provided by operating activities


54,009



149,148



17,161







220,318Cash flows from investing activities:Capital expenditures






(162,578
)


(34,492
)






(197,070
)Proceeds from the sale of assets






1,449



3,063







4,512Proceeds from insurance claims










951







951Investment in unconsolidated joint venture






(5,000
)










(5,000
)Net cash used in investing activities






(166,129
)


(30,478
)






(196,607
)Cash flows from financing activities:Proceeds from issuance of debt


50,000















50,000Principal payments under debt obligations


(35,000
)














(35,000
)Proceeds from revolver draw


73,000















73,000Payment of debt issuance costs


(1,846
)














(1,846
)Proceeds from stock options exercised


1,969















1,969Excess tax benefit from stock-based compensation


340















340Intercompany advances, net


(62,474
)


18,408



44,066







Net cash provided by financing activities


25,989



18,408



44,066







88,463Net increase in cash and cash equivalents


79,998



1,427



30,749







112,174Cash and cash equivalents at beginning of year


31,326



8,314



20,484







60,124Cash and cash equivalents at end of year

$
111,324


$
9,741


$
51,233


$



$
172,298  69




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATING
    CONDENSED STATEMENT OF CASH FLOWS
  Year Ended December 31, 2007Parent


Guarantor


Non-Guarantor


Eliminations


Consolidated(Unaudited)(Dollars in thousands)Cash flows from operating activities:Net income (loss)

$
102,846


$
121,064


$
(19,626
)

$
(101,438
)

$
102,846Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization






77,204



8,599







85,803Amortization of debt issuance and premium


845















845Loss on extinguishment of debt


1,396















1,396Gain/(loss) on disposition of assets






(16,448
)


16







(16,432
)Deferred income tax expense


15,056



2,626



1,611







19,293Equity in loss of unconsolidated joint venture










27,101







27,101Provision for reduction in carrying value of certain assets






1,462











1,462Expenses not requiring cash


13,247



(590
)










12,657Equity in net earnings of subsidiaries


(101,432
)










101,432



Change in accounts receivable


(25,844
)


10,149



(44,514
)






(60,209
)Change in other assets


(21,409
)


36,881



(47,232
)






(31,760
)Change in liabilities


(24,119
)


(85,496
)


40,883



6



(68,726
)Net cash provided by (used in) operating activities


(39,414
)


146,852



(33,162
)






74,276Cash flows from investing activities:Capital expenditures






(235,189
)


(6,909
)






(242,098
)Proceeds from the sale of assets


54



22,865



526







23,445Proceeds from insurance claims






7,844











7,844Investment in unconslidated joint venture










(5,000
)






(5,000
)Purchase of marketable securities


(101,075
)














(101,075
)Proceeds from sale of marketable securities


161,995



2,000











163,995Net cash provided by (used in) investing activities


60,974



(202,480
)


(11,383
)






(152,889
)Cash flows from financing activities:Proceeds from issuance of debt


125,000















125,000Principal payments under debt obligations


(100,000
)














(100,000
)Proceeds from draw on revolver credit facility


20,000















20,000Purchase of call options


(31,475
)














(31,475
)Proceeds from sale of common stock warrants


20,250















20,250Payment of debt issuance costs


(4,618
)














(4,618
)Proceeds from stock options exercised


15,455















15,455Excess tax benefit from stock based compensation


1,922















1,922Intercompany advances, net


(96,797
)


49,575



47,222







Net cash provided by (used in) financing activities


(50,263
)


49,575



47,222







46,534Net increase (decrease) in cash and cash equivalents


(28,703
)


(6,053
)


2,677







(32,079
)Cash and cash equivalents at beginning of year


60,029



14,367



17,807







92,203Cash and cash equivalents at end of year

$
31,326


$
8,314


$
20,484


$



$
60,124  70




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 6 
    Derivative Financial Instruments  variable-to-fixed
  mark-to-market
  Note 7 
    Income
    Taxes    Year Ended December 31,2009


2008


2007(Dollars in thousands)United States

$
(62,265
)

$
(30,212
)

$
125,424Foreign


72,092



59,882



14,317$
9,827


$
29,670


$
139,741     Year Ended December 31,2009


2008


2007(Dollars in Thousands)Current:United States:Federal

$
(4,541
)

$
(3,751
)

$
13,860State


128



407



791Foreign


19,837



1,805



2,951Deferred:United States:Federal


(14,818
)


8,914



15,838State


(1,793
)


(784
)


4,183Foreign


1,747



351



(728
)$
560


$
6,942


$
36,895  71




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


2007% of Pre-Tax





% of Pre-Tax





% of Pre-TaxAmount


Income


Amount


Income


Amount


Income(Dollars in Thousands)Computed Expected Tax Expense

$
3,439



35
%

$
10,384



35
%

$
48,909



35
%Foreign Taxes


20,432



208
%


22,391



75
%


12,669



9
%Tax Effect Different From Statutory Rates


(10,658
)


(108
)%


(4,449
)


(15
)%


8,916



6
%State Taxes, net of federal benefit


(1,355
)


(14
)%


(180
)


(1
)%


4,973



4
%Foreign Tax Credits


(14,152
)


(144
)%


(20,404
)


(69
)%


(16,020
)


(11
)%Kazakhstan Tax Credits


















(22,547
)


(16
)%Kazakhstan FIN 48 Items










(13,002
)


(44
)%


(12,427
)


(9
)%Change in Valuation Allowance


638



6
%


(1,835
)


(6
)%


5,764



4
%Foreign Corporation Income


5,116



52
%


2,997



10
%


304



FIN 48  Uncertain Tax Positions


1,184



12
%










7,807



6
%FIN 48  Foreign Tax Credits  Prior
    Years


1,798



18
%














State NOL


(165
)


(2
)%














Tax Benefit of Foreign Divestment










(3,456
)


(12
)%






Permanent Differences


2,893



29
%


3,189



11
%


(465
)


Prior Year Return to Provision Adjustments


(3,237
)


(33
)%














Foreign Tax Credits  Prior Years


(5,389
)


(55
)%














Other


16







(1,329
)


(4
)%


(988
)


(1
)%Goodwill










12,636



43
%






Actual Tax Expense

$
560



6
%

$
6,942



23
%

$
36,895



27
%  72




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2009


2008(Dollars in thousands)Deferred tax assetsCurrent deferred tax assets:Reserves established against realization of certain assets

$
4,876


$
5,362Accruals not currently deductible for tax purposes


4,774



4,373Gross current deferred tax assets


9,650



9,735Current deferred tax valuation allowance






0Net current deferred tax assets


9,650



9,735Non-current deferred tax assets:Federal net operating loss carryforwards


4,288



0State net operating loss carryforwards


6,291



4,273Other state deferred tax asset, net


4,913



5,015Foreign Tax Credits


14,152



0Other long term liabilities


2,149



2,149Deferred compensation






809Note Hedge Interest


7,204



9,304Percentage of Completion Construction Projects


17



491Goodwill


3,483



5,810FIN 48


11,245



5,162Foreign tax local


6,232



0Property, Plant and equipment






2,941Other


969



(531
)Rounding






0Gross long-term deferred tax assets


60,943



35,423Valuation Allowance


(5,194
)


(4,556
)Net non-current deferred tax assets


55,749



30,867Net deferred tax assets


65,399



40,602Deferred tax liabilities:Non-current deferred tax liabilities:Property, Plant and equipment


(1,963
)


(4,507
)Goodwill






0Deferred tax impact of 481(a) adjustment related to FTCs






(4,645
)Foreign tax local


(6,708
)


(342
)Federal benefit of foreign tax


(1,032
)


(1,032
)Convertible Debt  State


(1,023
)


(1,024
)Convertible Debt  Federal


(5,109
)


(6,887
)Deferred compensation


(239
)


0Other






2,296Net non-current deferred tax liabilities


(16,074
)


(16,141
)Net deferred tax asset

$
49,325


$
24,461  73




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15-year
          In MillionsBalance at January 1, 2009

$
(11.7
)Decreases related to prior year tax positions


0.0Additions based on tax positions taken during the current period


(2.9
)Lapse of statute


0.0Balance at December 31, 2009

$
(14.6
)  74




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Colombia

2007-presentKazakhstan

2004-presentMexico

2004-presentNew Zealand

2004-presentPapua New Guinea

2003-presentRussia

2006-presentUnited States  Federal

1992-present       Note 8 
    Saudi
    Arabia Joint Venture        Note 9 
    Common
    Stock and Stockholders Equity  Stock Plans
     75




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        1997 Stock PlanIncentive Options


Non-Qualified OptionsWeighted





WeightedAverage





AverageExercise





Exercise


Restricted


IntrinsicShares


Price


Shares


Price


Shares


ValueOutstanding at December 31, 2008





$




290,300


$
2.877



Granted


















Exercised










(85,000
)


2,349






$
183,664Cancelled










(75,000
)


2.240



Outstanding at December 31, 2009





$




130,300


$
3.588



     Outstanding OptionsWeightedAverage

WeightedRemaining

Average

AggregateNumber of

Contractual

Exercise

IntrinsicPlan

Exercise Prices

Shares

Life

Price

Value1997 Stock Plan 
    Non-qualified

$
1.990 - $4.200



130,300



1.21 years


$
3.588


$
177,469   Exercisable OptionsWeightedAverage

AggregateNumber of

Exercise

IntrinsicPlan

Exercise Prices

Shares

Price

Value1997 Stock Plan
    Non-qualified

$
1.990 - $4.200



130,300


$
3.588


$
177,469     Stock Reserved for Issuance
  December 31,2009


2008Stock plans


3,738,679



2,091,037Stock bonus plan


24,666



355,359Total shares reserved for issuance


3,763,345



2,446,396  76




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10 
    Reconciliation
    of Income and Number of Shares Used to Calculate Basic and
    Diluted Earnings Per Share (EPS)  For the Year Ended December 31, 2009Income


Shares


Per-Share(Numerator)


(Denominator)


AmountBasic EPS

$
9,267,000



113,000,555


$
0.08Effect of dilutive securities:Stock options and restricted stock






1,924,891Diluted EPS

$
9,267,000



114,925,446


$
0.08   For the Year Ended December 31, 2008Income


Shares


Per-Share(Numerator)


(Denominator)


AmountBasic EPS

$
22,728,000



111,400,396


$
0.20Effect of dilutive securities:Stock options and restricted stock






1,030,149


$
Diluted EPS:

$
22,728,000



112,430,545


$
0.20   For the Year Ended December 31, 2007Income


Shares


Per-Share(Numerator)


(Denominator)


AmountBasic EPS

$
102,846,000



109,542,364


$
0.94Effect of dilutive securities:Stock options and restricted stock






1,314,330


$
(0.01
)Diluted EPS:

$
102,846,000



110,856,694


$
0.93         Note 11 
    Employee
    Benefit Plan    Note 12 
    Reportable
    Segments   77




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  cost-to-cost
  Year Ended December 31,Operations by Reportable Industry Segment

2009


2008


2007(Dollars in thousands)Revenues:International drilling(1)

$
293,337


$
325,096


$
213,566U.S. drilling(1)


49,628



173,633



225,263Rental tools(1)


115,057



171,554



138,031Project management and engineering services(1)


109,445



110,147



77,713Construction contract(1)


185,443



49,412



Total revenues


752,910



829,842



654,573Operating income:International drilling(2)


50,723



41,786



31,046U.S. drilling(2)


(26,797
)


53,964



97,679Rental tools(2)


27,841



74,689



59,264Project management and engineering services(2)


23,646



18,470



12,732Construction contract(2)


8,132



2,597



Total operating income


83,545



191,506



200,721General and administrative expense


(45,483
)


(34,708
)


(24,708
)Impairment of goodwill






(100,315
)


Provision for reduction in carrying value of certain assets


(4,646
)






(1,462
)Gain on disposition of assets, net


5,906



2,697



16,432Total operating income


39,322



59,180



190,983Interest expense


(29,450
)


(29,266
)


(25,157
)Changes in fair value of derivative positions










(671
)Loss on extinguishment of debt










(2,396
)Equity in loss of unconsolidated joint venture, net of taxes






(1,105
)


(27,101
)Minority interest










(1,000
)Other


(45
)


861



7,143Income from continuing operations before income taxes

$
9,827


$
29,670


$
141,801Identifiable assets:International drilling

$
511,716


$
540,575U.S. drilling


132,386



157,508Rental tools


96,469



125,170Total identifiable assets


740,571



823,253Corporate assets


502,515



382,468Total assets

$
1,243,086


$
1,205,721  78




---



##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (1)
    
    In 2009, BP accounted for approximately 23 percent of the
    Companys total revenues, approximately $150.3 million
    of the Companys construction contract segment revenues and
    approximately $2.6 million of the Companys rental
    tools segment revenues. In 2009, ExxonMobil accounted for
    approximately 15 percent of the Companys total
    revenues, approximately $75.7 million of the Companys
    project management and engineering services segment revenues and
    approximately $20.7 million of the Companys rental
    tools segment revenues. In 2008, ExxonMobil accounted for
    approximately 13 percent of the Companys total
    revenues, approximately $62.2 million of the Companys
    project management and engineering services segment revenues and
    approximately $22.3 million of the Companys rental
    tools segment revenues. In 2007, ExxonMobil accounted for
    approximately 11 percent of the Companys total
    revenues, approximately $63.0 million of the Companys
    project management and engineering services segment revenues and
    approximately $11.4 million of the Companys rental
    tools segment revenues.(2)
    
    Operating income is calculated as revenues less direct operating
    expenses, including depreciation and amortization expense.  Year Ended December 31,Operations by Reportable Industry Segment

2009


2008


2007(Dollars in thousands)Capital expenditures:International drilling

$
29,864


$
75,680


$
144,984U.S. drilling


86,943



82,396



32,563Rental tools


36,822



36,806



62,011Corporate


9,155



2,188



2,540Total capital expenditures

$
162,784


$
197,070


$
242,098Depreciation and amortization:International drilling

$
48,383


$
50,461


$
26,785U.S. drilling


29,200



34,469



32,102Rental tools


33,798



29,057



23,715Corporate


2,594



2,969



3,201Total depreciation and amortization

$
113,975


$
116,956


$
85,803   79




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31,Operations by Geographic Area

2009


2008


2007(Dollars in thousands)Revenues:Africa and Middle East

$
32,003


$
40,036


$
14,580Asia Pacific


33,883



56,998



67,037CIS


195,807



210,325



128,103Latin America


117,651



122,521



75,683United States


373,566



399,962



369,170Total revenues


752,910



829,842



654,573Operating income:Africa and Middle East(1)


(2,795
)


(13,293
)


(14,466
)Asia Pacific(1)


7,539



7,668



10,670CIS(1)


44,647



37,068



18,914Latin America(1)


20,964



27,072



26,825United States(1)


13,190



132,991



158,778Total operating income


83,545



191,506



200,721General and administrative expense


(45,483
)


(34,708
)


(24,708
)Impairment of goodwill






(100,315
)


Provision for reduction in carrying value of certain assets


(4,646
)






(1,462
)Gain on disposition of assets, net


5,906



2,697



16,432Total operating income


39,322



59,180



190,983Interest expense


(29,450
)


(29,266
)


(25,157
)Changes in fair value of derivative positions










(671
)Loss on extinguishment of debt










(2,396
)Equity in loss of unconsolidated joint venture, net of taxes






(1,105
)


(27,101
)Minority interest










(1,000
)Other


(45
)


861



7,143Income from continuing operations before income taxes

$
9,827


$
29,670


$
141,801Long-lived assets:(2)Africa and Middle East

$
36,821


$
40,724Asia Pacific


22,335



27,663CIS


142,888



146,609Latin America


61,322



63,560United States


453,431



396,992Total long-lived assets

$
716,797


$
675,548     (1)
    
    Operating income is calculated as revenues less direct operating
    expenses, including depreciation and amortization expense.(2)
    
    Long-lived assets primarily consist of property, plant and
    equipment, net and excludes assets held for sale, if any. 80




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 13 
    Commitments
    and Contingencies    Year EndedDecember 31,(Dollars in Thousands)2010

$
6,4382011


2,9322012


2,4622013


1,9462014


1,382Thereafter


9,902Total

$
25,062              81




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Kazakhstan
    Tax Claims
      Bangladesh
    Claim
    Asbestos-Related
    Claims
     82




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Gulfco
    Site
    Customs
    Agent and Foreign Corrupt Practices Act (FCPA)
    Investigation
       83




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Economic
    Sanctions Compliance
    Kazakhstan
    Ministry of Finance Tax Audit
       84




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 14 
    Related
    Party Transactions  Consulting
    Agreement
      U.S.-Kazakhstan
  Other
    Related Party Agreements
    Note 15 
    Supplementary
    Information     85




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 16 
    Selected
    Quarterly Financial Data  QuarterYear 2009

First


Second


Third


Fourth(2)


Total(2)(Unaudited)(Dollars in thousands except per share amounts)Revenues

$
173,925


$
221,791


$
181,409


$
175,785


$
752,910Operating gross margin

$
25,626


$
27,290


$
16,226


$
14,403


$
83,545Operating income

$
12,644


$
16,868


$
4,882


$
4,928


$
39,322Net income (loss)

$
2,106


$
4,391


$
7,094


$
(4,324
)

$
9,267Basic earnings per share  net income (loss)(1)

$
0.02


$
0.04


$
0.06


$
(0.04
)

$
0.08Diluted earnings per share  net income (loss)(1)

$
0.02


$
0.04


$
0.06


$
(0.04
)

$
0.08   QuarterYear 2008

First(2)


Second(2)


Third(2)


Fourth(2)


Total(2)(Unaudited)(Dollars in thousands except per share amounts)Revenues

$
173,278


$
216,730


$
227,454


$
212,380


$
829,842Operating gross margin

$
41,490


$
50,035


$
52,319


$
47,662


$
191,506Operating income (loss)

$
35,401


$
42,190


$
43,847


$
(62,258
)

$
59,180Net income (loss)

$
23,202


$
21,897


$
17,830


$
(40,201
)

$
22,728Basic earnings per share  net income (loss)(1)

$
0.21


$
0.20


$
0.16


$
(0.36
)

$
0.20Diluted earnings per share  net income (loss)(1)

$
0.21


$
0.19


$
0.16


$
(0.36
)

$
0.20     (1)
    
    As a result of shares issued during the year, earnings per share
    for each of the years four quarters, which are based on
    weighted average shares outstanding during each quarter, may not
    equal the annual earnings per share, which is based on the
    weighted average shares outstanding during the year.(2)
    
    Total operating income and net income includes a gain of
    $15.1 million related to the sale of two barge rigs in the
    first quarter. Also included is a provision for reduction in
    carrying value of certain assets of $1.1 million recorded
    in the third quarter, and an equity loss in an unconsolidated
    joint venture of $1.1 million and $26.0 million in the
    third and fourth quarters, respectively. See Note 8 for
    further information on the joint venture. Net income in the
    first quarter included income tax expense of $7.0 million
    related to the sale of the two barge rigs and $1.9 million
    related to interest on tax uncertainties recorded. Net income in
    the second quarter included income tax expense of
    $4.0 million interest on tax uncertainties recorded. Net
    income in the fourth quarter included an income tax benefit of
    $25.6 million related to the settlement of tax matters
    related to accounting for uncertainties in income taxes. See
    Note 7 for further detail.  Note 17 
    Recent
    Accounting Pronouncements  Consolidation
 86




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##### Table of Contents



NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Measurements and Disclosures
      Subsequent Events
 87




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation of Disclosure Controls and Procedures Rules 13a-15(e) 15d-15(e)
  Managements Report on Internal Control over Financial
    Reporting  Rules 13a-15(f) 15d-15(f).
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the Company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with accounting principles generally accepted in the
    United States, and that receipts and expenditures of the Company
    are being made only in accordance with authorization of
    management and directors of the Company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.        Form 10-K,
 88




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##### Table of Contents



Changes in Internal Control over Financial
    Reporting 
  ITEM 9B.
    OTHER
    INFORMATION   PART III ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    Form 10-K.
      http://www.parkerdrilling.com. Form 8-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND RELATED
    STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE   89




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##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES      PageReport of Independent Registered Public
    Accounting Firm


48Consolidated Statement of Operations for the
    years ended December 31, 2009, 2008 and 2007


50Consolidated Balance Sheet as of
    December 31, 2009 and 2008


51Consolidated Statement of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007


52Consolidated Statement of Stockholders
    Equity for the years ended December 31, 2009, 2008 and
    2007


53Notes to the Consolidated Financial Statements


54(2) Financial Statement Schedule:Schedule II  Valuation and
    qualifying accounts


93     ExhibitNumber



Description3(a)




Restated Certificate of Incorporation of the Company, as amended
    on May 16, 2007 (incorporated by reference to
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    filed on November 9, 2007).3(b)




By-Laws of the Company, as amended on January 31, 2003
    (incorporated by reference to the Companys Annual Report
    on
    Form 10-K/A
    filed on September 26, 2003).4(a)




Indenture dated as of October 10, 2003 between the Company,
    as issuer, certain Subsidiary Guarantors (as defined therein)
    and JPMorgan Chase Bank, as Trustee, respecting the
    9.625% Senior Notes due 2013 (incorporated by reference to
    the Companys Registration Statement on
    Form S-4
    (No. 333-110374)
    filed on November 10, 2003).4(b)




Indenture, dated as of July 5, 2007, among Parker Drilling
    Company, the guarantors from time to time party thereto and The
    Bank of New York Trust Company, N.A., with respect to the
    2.125% Convertible Senior Notes due 2013 (incorporated by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form 8-K
    filed on July 5, 2007).4(c)




Form of 2.125% Convertible Senior Note due 2013 (included
    in Exhibit 4(b)).10(a)




Credit Agreement, dated as of May 15, 2008, among Parker
    Drilling Company, as Borrower, Bank of America, N.A., as
    Administrative Agent and L/C Issuer, the several banks and other
    financial institutions or entities from time to time parties
    thereto, ABN AMRO BANK N.V., as Documentation Agent, and Banc of
    America Securities LLC and Lehman Brothers Inc., as Joint Lead
    Arrangers and Book Managers (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed on May 21, 2008).10(b)




Amended and Restated Parker Drilling Company Stock Bonus Plan
    effective as of January 1, 1999 (incorporated by reference
    to Exhibit 10(a) to the Companys Quarterly Report on
    Form 10-Q
    filed on May 14, 1999).* 90




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##### Table of Contents



ExhibitNumber



Description10(c)




Parker Drilling Company Incentive Compensation Plan, dated
    December 17, 2008, and effective January 1, 2008
    (incorporated by reference to Exhibit 10(b) to the
    Companys Annual Report on
    Form 10-K
    filed on March 2, 2009).*10(d)




1994 Parker Drilling Company Limited Deferred Compensation Plan
    (incorporated herein by reference to Exhibit 10(h) to the
    Companys Annual Report on
    Form 10-K
    filed on November 9, 1995).*10(e)




1994 Non-Employee Director Stock Option Plan (incorporated by
    reference to Exhibit 10(i) to the Companys Annual
    Report on
    Form 10-K
    filed on November 9, 1995).*10(f)




1994 Executive Stock Option Plan (incorporated by reference to
    Exhibit 10(j) to the Companys Annual Report on
    Form 10-K
    filed on November 9, 1995).*10(g)




Parker Drilling Company and Subsidiaries 1991 Stock Grant Plan
    (incorporated by reference to Exhibit 10(c) to the
    Companys Annual Report on
    Form 10-K
    dated November 2, 1992).*10(h)(1)




Third Amended and Restated Parker Drilling 1997 Stock Plan
    effective July 24, 2002 (incorporated by reference to
    Exhibit 10(e) to the Companys Annual Report on
    Form 10-K
    filed on March 20, 2003).*10(h)(2)




Form of Stock Option Award Agreement to the Third Amended and
    Restated Parker Drilling 1997 Stock Plan (incorporated by
    reference to Exhibit 10(m) to the Companys Annual
    Report on
    Form 10-K
    filed on March 16, 2005).*10(h)(3)




Form of Stock Grant Award Agreement to the Third Amended and
    Restated Parker Drilling 1997 Stock Plan (incorporated by
    reference to Exhibit 10(n) to the Companys Annual
    Report on
    Form 10-K
    filed on March 16, 2005).*10(i)(1)




2005 Long Term Incentive Plan (2005 LTIP)
    (incorporated by reference to the Annex E to the
    Companys Definitive Proxy Statement filed on
    March 25, 2005).*10(i)(2)




First Amendment to the 2005 LTIP (incorporated by reference to
    Annex B to the Companys Definitive Proxy Statement
    filed on March 21, 2008).*10(i)(3)




Second Amendment to the 2005 LTIP, dated December 13, 2008
    (incorporated by reference to Exhibit 10(j) to the
    Companys Annual Report on
    Form 10-K
    filed on March 2, 2009).*10(i)(4)




Form of Restricted Stock Award Agreement under the 2005 LTIP
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed on May 3, 2005).*10(i)(5)




Form of Performance Based Restricted Stock Award Agreement under
    the 2005 LTIP (incorporated by reference to Exhibit 10.3 to
    the Companys Current Report on
    Form 8-K
    filed on May 3, 2005).*10(j)




Form of Indemnification Agreement entered into between Parker
    Drilling Company and each director and executive officer of
    Parker Drilling Company (incorporated by reference to
    Exhibit 10(g) to the Companys Annual Report on
    Form 10-K
    filed on March 20, 2003).*10(k)




Form of Employment Agreement entered into between Parker
    Drilling Company and certain executive and other officers of
    Parker Drilling Company, (incorporated by reference to
    Exhibit 10(h) to the Companys Annual Report on
    Form 10-K
    filed on March 20, 2003).*10(l)




Form of Lease Agreement between Parker Drilling Management
    Services, Inc. entered into by the Robert L. Parker Sr. Family
    Limited Partnership and Robert L. Parker Jr. dated
    January 1, 2004 (incorporated by reference to
    Exhibit 10(a) to the Companys Quarterly Report on
    Form 10-Q
    filed on August 9, 2004).*10(m)




Form of Personnel Services Contract between Parker Drilling
    Management Services, Inc. and the Robert L. Parker Sr. Family
    Limited Partnership and Robert L. Parker Jr. dated
    January 1, 2004 (incorporated by reference to
    Exhibit 10(b) to the Companys Quarterly Report on
    Form 10-Q
    filed on August 9, 2004).*10(n)(1)




Consulting Agreement between Parker Drilling Company and Robert
    L. Parker Sr. dated April 12, 2006 (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on
    Form 8-K
    filed on April 12, 2006).* 91




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##### Table of Contents



ExhibitNumber



Description10(n)(2)




Amendment to Consulting Agreement between Parker Drilling
    Company and Robert L. Parker Sr., effective as of May 1,
    2008 (incorporated by reference to Exhibit 10(t) to the
    Companys Annual Report on
    Form 10-K
    filed on March 2, 2009).*10(n)(3)




Second Amendment to Consulting Agreement between Parker Drilling
    Company and Robert L. Parker Sr., dated May 1, 2009.*10(o)




Termination of Split Dollar Life Insurance Agreement between
    Parker Drilling Company, Robert L. Parker Sr., and Robert L.
    Parker Sr. and Catherine Mae Parker Family Trust dated
    April 12, 2006 (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    filed on April 12, 2006).*10(p)




Confirmation of Convertible Bond Hedge Transaction, dated as of
    June 28, 2007, by and between Parker Drilling Company and
    Bank of America, N.A (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(q)




Confirmation of Convertible Bond Hedge Transaction, dated as of
    June 28, 2007, by and between Parker Drilling Company and
    Deutsche Bank AG, London Branch (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(r)




Confirmation of Convertible Bond Hedge Transaction, dated as of
    June 28, 2007, by and between Parker Drilling Company and
    Lehman Brothers OTC Derivatives Inc. (incorporated by reference
    to Exhibit 10.3 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(s)




Confirmation of Issuer Warrant Transaction dated as of
    June 28, 2007, by and between Parker Drilling Company and
    Bank of America, N.A. (incorporated by reference to
    Exhibit 10.4 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(t)




Confirmation of Issuer Warrant Transaction, dated as of
    June 28, 2007, by and between Parker Drilling Company and
    Deutsche Bank AG, London Branch (incorporated by reference to
    Exhibit 10.5 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(u)




Confirmation of Issuer Warrant Transaction dated as of
    June 28, 2007, by and between Parker Drilling Company and
    Lehman Brothers OTC Derivatives Inc. (incorporated by reference
    to Exhibit 10.6 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(v)




Amendment to Confirmation of Issuer Warrant Transaction dated as
    of June 29, 2007, by and between Parker Drilling Company
    and Bank of America, N.A. (incorporated by reference to
    Exhibit 10.7 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(w)




Amendment to Confirmation of Issuer Warrant Transaction, dated
    as of June 29, 2007, by and between Parker Drilling Company
    and Deutsche Bank AG, London Branch (incorporated by reference
    to Exhibit 10.8 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2007).10(x)




Amendment to Confirmation of Issuer Warrant Transaction, dated
    as of June 29, 2007, by and between Parker Drilling Company
    and Lehman Brothers OTC Derivatives Inc. (incorporated by
    reference to Exhibit 10.9 to the Companys Current
    Report on
    Form 8-K
    filed on July 5, 2007).21




Subsidiaries of the Registrant.23
.1



Consent of KPMG LLP.31
.1



David C. Mannon, President and Chief Executive Officer,
    Rule 13a-14(a)/15d-14(a)
    Certification.31
.2



W. Kirk Brassfield, Senior Vice President and Chief Financial
    Officer,
    Rule 13a-14(a)/15d-14(a)
    Certification.32
.1



David C. Mannon, President and Chief Executive Officer,
    Section 1350 Certification.32
.2



W. Kirk Brassfield, Senior Vice President and Chief Financial
    Officer, Section 1350 Certification.     *
    
     Management contract, compensatory plan or agreement. 92




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##### Table of Contents



PARKER
    DRILLING COMPANY AND SUBSIDIARIES
  SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  Balance


Chargedat


to Cost


Charged





BalanceBeginning


and


to Other





at End ofClassifications

of Year


Expenses


Accounts


Deductions


Year(Dollars in thousands)Year ended December 31, 2009Allowance for doubtful accounts and notes

$
3,169


$
2,246


$



$
1,320


$
4,095Deferred tax valuation allowance

$
4,556


$
638


$



$



$
5,194Year ended December 31, 2008Allowance for doubtful accounts and notes

$
3,152


$
76


$



$
59


$
3,169Reduction in carrying value of rig materials and supplies

$
2,607


$
(903
)

$



$
1,704


$
Deferred tax valuation allowance

$
6,391


$



$



$
1,835


$
4,556Year ended December 31, 2007Allowance for doubtful accounts and notes

$
1,481


$
1,975


$



$
304


$
3,152Reduction in carrying value of rig materials and supplies

$
4,337


$
(590
)





$
1,140


$
2,607Deferred tax valuation allowance

$



$



$
6,391


$



$
6,391  93




---



##### Table of Contents



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
    1934, the registrant has duly caused this report to be signed on
    its behalf by the undersigned hereunto duly authorized.



PARKER DRILLING COMPANY By:
    /s/ W. Kirk Brassfield         Signature

Title

DateBy:

/s/  Robert
    L. Parker Jr.Robert
    L. Parker Jr.

Executive Chairman and Director

March 3, 2010By:

/s/  David
    C. MannonDavid
    C. Mannon

President and Chief Executive Officer (Principal Executive
    Officer)

March 3, 2010By:

/s/  W.
    Kirk BrassfieldW.
    Kirk Brassfield

Senior Vice President and Chief Financial Officer (Principal
    Financial Officer)

March 3, 2010By:

/s/  Philip
    A. SchlomPhilip
    A. Schlom

Controller (Principal Accounting Officer)

March 3, 2010By:

/s/  George
    J. DonnellyGeorge
    J. Donnelly

Director

March 3, 2010By:

/s/  John
    W. Gibson, Jr.John
    W. Gibson, Jr.

Director

March 3, 2010By:

/s/  Robert
    W. GoldmanRobert
    W. Goldman

Director

March 3, 2010By:

/s/  Gary
    R. KingGary
    R. King

Director

March 3, 2010By:

/s/  Robert
    E. McKee IIIRobert
    E. McKee III

Director

March 3, 2010By:

/s/  Roger
    B. PlankRoger
    B. Plank

Director

March 3, 2010By:

/s/  R.
    Rudolph ReinfrankR.
    Rudolph Reinfrank

Director

March 3, 2010  94




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##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber



Description10(n)(3)




Second Amendment to Consulting Agreement between Parker Drilling
    Company and Robert L. Parker Sr., dated May 1, 2009.21




Subsidiaries of the Registrant.23
.1



Consent of KPMG LLP  Independent Registered Public
    Accounting Firm.31
.1



David C. Mannon, President and Chief Executive Officer,
    Rule 13a-14(a)/15d-14(a)
    Certification.31
.2



W. Kirk Brassfield, Senior Vice President and Chief Financial
    Officer,
    Rule 13a-14(a)/15d-14(a)
    Certification.32
.1



David C. Mannon, President and Chief Executive Officer,
    Section 1350 Certification.32
.2



W. Kirk Brassfield, Senior Vice President and Chief Financial
    Officer, Section 1350 Certification.  95