JANUARY 15, 2004 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today announced that it has signed an asset purchase agreement to acquire a seven rig drilling fleet and related equipment for $12 million. The fleet consists of seven mechanical 700 to 1200 horsepower rigs, capable of drilling to depths of 10,000 to 14,000 feet. The transaction is expected to close in early March 2004, subject to financing satisfactory to the Company, thereby increasing the Company’s fleet size to 35 drilling rigs.

Wm. Stacy Locke, Pioneer Drilling’s President and Chief Executive Officer, stated, “We remain focused on growth and building a quality land fleet. We are very excited about this acquisition. All seven rigs are working and we anticipate that the fleet utilization will remain high. When completed, this transaction will allow us to increase market share within our existing markets as well as further expand geographically.”

Pioneer Drilling Company provides land contract drilling services to independent and major oil and gas operators drilling wells in north, east and south Texas. The Company’s fleet consists of 28 land drilling rigs that drill in depth ranges between 10,000-18,000 feet.

This press release contains various forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this press release include the statements regarding the closing of the transaction described above, the Company’s anticipated fleet utilization, increase in market share in existing markets and geographic expansion. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, i t can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions, including, among other matters: general and regional economic conditions and industry trends; the continued strength or weakness of the contract land drilling industry in the geographic areas where the Company operates; decisions about onshore exploration and development projects to be made by oil and gas companies; the highly competitive nature of the contract land drilling business; the Company’s future financial performance, including availability, terms and deployment of capital; the continued availability of qualified personnel; and changes in governmental regulations, including those relating to the environment. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. These risks, as well as others, are discussed in greater detail in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2003 and subsequent Form 10-Q’s.

CONTACTS:

Wm. Stacy Locke, President & CEO

Pioneer Drilling Company

210-828-7689

Ken Dennard / k sdennard@drg-e.co m

Lisa Elliott / lelliott@drg-e.com

DRG&E / 713-529-6600