SEPARATION AGREEMENT AND RELEASE

Exhibit 10.1

SEPARATION AGREEMENT AND RELEASE

     THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”) is made by and between Parker Drilling Company, a Delaware corporation (“Parker Drilling” or the “Company”) and Ronald C. Potter (“Executive”) and shall become effective on the eighth day following its execution by Executive and return to Parker Drilling, provided Executive has not revoked his consent to this Agreement pursuant to paragraph 18(c) (“Effective Date”). Parker Drilling and Executive are sometimes referred to collectively as the “Parties” or individually as a “Party”.

PURPOSE

     Parker Drilling and Executive have reached a mutual agreement that Executive’s employment with the Company will terminate on March 27, 2009 (the “Termination Date”) pursuant to the terms of this Agreement.

TERMS

     To achieve a final and amicable resolution of the employment relationship in all its aspects and in consideration of the mutual covenants and promises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

     1.  Termination of Employment Agreement. Except as otherwise provided herein or in the Consulting Agreement executed by the Parties as of March 28, 2009 (the “Consulting Agreement”), this Agreement replaces and terminates that certain Employment Agreement entered into as of July 1, 2003, as amended by the First Amendment to Employment Agreement dated October 26, 2005 and further amended by the Amendment to Employment Agreement effective as of December 31, 2008 (sometimes collectively referred to as the “Employment Agreement”) and will constitute the entire agreement between the Parties.

     2.  Minimum Payments . On the fifth business day after the Effective Date, Parker Drilling shall pay to Executive in a lump sum the amount of $39,509.62, which represents Executive’s unpaid salary and vacation pay as provided for in Section 6(a)(1) and 6(a)(3) of the Employment Agreement. Executive acknowledges that no payment is required under Section 6(a)(2) of the Employment Agreement.

     3.  Severance Payments . On the first regularly scheduled Parker Drilling payroll date that commences more than six months after the Termination Date or, if later, Executive’s “separation from service” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other guidance thereunder (“Section 409A”), Parker Drilling shall pay to Executive in lump sum the amount of Seven Hundred Eight Thousand Seventy-Five United States Dollars ($708,075), representing the “Additional Payment” required by Section 6(b)(1) of the Employment Agreement.

     4.  Vesting of Restricted Stock. Executive is the recipient of 161,362 shares of Parker Drilling common stock (“Grant Shares”), which shares are listed on Appendix A to this Agreement, granted under certain award agreements (the “Restricted Stock Award Agreements”) pursuant to the terms of the Parker Drilling Company 2005 Long-Term Incentive Plan effective as of March 18, 2005. The terms of the Restricted Stock Award Agreements provide that Executive’s rights to the Grant Shares shall terminate upon termination of Executive’s employment with the Company. Under the terms of the Parker Drilling Company 2005 Long-Term Incentive Plan (“2005 LTIP”) and the Restricted Stock Award Agreements issued pursuant to the 2005 Plan, Executive’s rights to such Grant Shares shall continue and such Grant Shares shall continue to vest under the terms of the respective Restricted Stock Award Agreement during the term of Executive’s Employment (as defined in the 2005 LTIP) as a consultant. In addition, at any time during the term of the Consulting Agreement, the Compensation Committee of the Board of Directors may, in its sole discretion, authorize the proper officers of the Company to amend the terms of any Restricted Stock Award Agreement to accelerate the vesting schedule related to some or all of the Grant Shares. In the event the Compensation Committee determines to approve the amendment of the terms of any Restricted Stock Award Agreement to accelerate the vesting schedule associated with any Grant Shares, the Company shall given written notice to the Executive of such amendment and such Grant Shares shall become fully vested and transferable to Executive free of any and all restrictions. Any Grant Share which remains subject to a vesting schedule at the end of the term of the Consulting Agreement shall be forfeited by Executive.

     5.  Executive’s Stock Options. Executive has been awarded 25,000 stock options (“Stock Options”), which stock options are listed on Appendix A to this Agreement, pursuant to the Parker Drilling Company 1997 Stock Plan, as amended. The terms of the Stock Option

Award Agreement entered into by the Company and Executive as of July 15, 2003 provide that Executive’s rights to the Option Shares are exercisable only during the time Executive remains an employee, director or consultant of the Company. Executive’s rights to such Option Shares shall continue during the term of the Consulting Agreement. In addition, at any time during the term of the Consulting Agreement, the Compensation Committee of the Board of Directors may, in its sole discretion, by written notice from the Company to Executive, extend the exercise period related to some or all of the Option Shares for any period from and after the expiration of the term of the Consulting Agreement up to and including July 15, 2010. In the event the Compensation Committee determines to extend the exercise period associated with any Option Shares, such Option Shares may be exercised at any time up to the later of: (i) the expiration of the term of the Consulting Agreement or (ii) the extended period approved by the Compensation Committee, if any, up to and including July 15, 2010.

     6.  Group Health Coverage. Parker Drilling shall maintain Executive’s group health plan and group dental plan coverage for a period of eighteen (18) months following the Termination Date, at substantially the same level of coverages as existed on the Termination Date; provided, however, Executive and his covered dependents, if any, shall not be required to pay any portion of the premium cost to retain such coverages but in all other respects shall be treated the same as other participants under the terms of such plans. Following the expiration of the 18-month period, Executive shall be entitled to elect additional continuation coverage under such plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and the Company’s procedures for COBRA administration, or otherwise. In the event that such additional COBRA coverage is elected, (i) the COBRA time period shall not be reduced by the post-termination continuation coverage provided pursuant to the foregoing provisions of this paragraph and (ii) Executive (and his covered dependents, if any) must pay the full COBRA premium rates as effective during such coverage period. In the event of any change to the group health plan or group dental plan following the Termination Date, Executive and his spouse and dependents, as applicable, shall be treated consistently with the then-current senior officers of Parker Drilling (or its successor) with respect to the terms and conditions of coverage and other substantive provisions of the plan; provided, however, no participant contributions shall be required from them unless the additional COBRA coverage period is in effect. Executive and his spouse hereby agree to acquire and maintain any and all coverage that either

or both of them are entitled to at any time during their lives under the Medicare program or any similar program of the United States Government or any agency thereof (hereinafter referred to as “Medicare”). The coverage described in the immediately preceding sentence includes, without limitation, parts A and B of Medicare and any additional parts of Medicare. Executive and his spouse further agree to pay any required premiums for Medicare coverage from their personal funds. Notwithstanding the foregoing provisions, the coverage of Executive (and his dependents, if any) under such medical and/or dental plans maintained by Parker Drilling shall terminate in the event that Executive becomes employed by another for-profit employer which maintains a group health plan or plans for its employees providing group medical coverage and group dental coverage; provided, however, any additional COBRA coverage shall not be terminated unless and until permitted under COBRA.

     7.  Withholdings; Right of Offset. Parker Drilling may withhold and deduct from any benefits and payments made or to be made pursuant to this Agreement (a) all Federal, state, local and other taxes as may be required pursuant to any law or governmental regulation or ruling, and (b) all other normal deductions made with respect to Parker Drilling’s employees generally, to the extent permissible under Section 409A.

     8.  Indemnity Rights. This Agreement shall not impair in any way the rights of Executive or the obligations of Parker Drilling under the terms of that certain Indemnification Agreement between Parker Drilling and the Executive dated April 6, 2004, and by its execution of this Agreement Parker Drilling expressly re-affirms all the rights of Executive and obligations of Parker Drilling under the terms of said Indemnification Agreement. Further, Executive will be given reasonable access to all Parker Drilling records that are deemed necessary or helpful to Executive or his counsel on any matter to which the Indemnification Agreement applies subject to execution by Executive of a Confidentiality Agreement with terms and conditions reasonably acceptable to Parker Drilling related to such records.

     9.  Miscellaneous Matters. Executive shall be allowed to retain the iPhone provided by Parker Drilling without cost to Executive, but Executive shall assume and pay all usage, repair or replacement charges associated with the cellular phone from and after the termination of the Consulting Agreement. Executive shall also be allowed to retain the laptop computer provided by Parker Drilling without cost to Executive; provided, however, Parker

Drilling retains the right to remove any information related to Parker Drilling which exists on the laptop fr