SAN ANTONIO, Aug. 8 /PRNewswire/ -- South Texas Drilling & Exploration, Inc. (AMEX:PDC) today reported record revenues, EBITDA and net income for the fiscal first quarter ended June 30, 2001.

Revenues for the first quarter of 2002 were $18.4 million, an increase of 107 percent from $8.9 million in the same quarter last year. EBITDA, defined as earnings before interest, taxes, depreciation and amortization, increased 477 percent to $6.9 million in the first quarter of 2002 compared to $1.2 million in the same period last year. Net income attributable to common shareholders in the first quarter of 2002 was $3.1 million or $0.20 per diluted share, compared to net income of $573,000 or $0.05 per diluted share during the first quarter of 2001.

Average rig utilization for the first quarter of 2002 was 98 percent, up from 83 percent in the first quarter of 2001. Revenue days increased 138 percent to 1,441 days during the first quarter compared to 606 days for the first quarter of 2001. Drilling margins increased to 41.1 percent, or $7.5 million, up from drilling margins of 15 percent, or $1.3 million in the first quarter of 2001.

Michael E. Little, South Texas Drilling's Chairman and Chief Executive Officer, stated, "We are pleased to report another quarter of solid growth and improved margins. Since last year's first quarter, we have successfully increased our land rig fleet from 8 rigs to 17 rigs at a time when our drilling margins increased 468 percent. We expect continued growth in revenues from our newly constructed rig, which is going to work this month, and from two rigs being added to our fleet in the third quarter.

"Our premium quality fleet with medium to deep depth capabilities positions us well to continue benefiting from the strong demand for land drilling rigs in our markets. We have approximately 69 percent of our revenues secured by term daywork contracts through March 31, 2002, and are seeing continued demand from our customers," added Mr. Little.

South Texas Drilling's management team will be holding a conference call on Wednesday, August 8, 2001, at 11:00 a.m. eastern time. To participate in the call, dial 719-457-2668 at least ten minutes before the conference call begins and ask for the South Texas Drilling conference call. A replay of the call will be available approximately two hours after the call ends and will be accessible until August 15, 2001. To access the replay, dial 719-457-0820 and enter the pass code 710225.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by accessing http://www.easterlyir.com . To listen to the live call on the web, please visit the Easterly Investor Relations web site at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live web cast, an archive will be available shortly after the call. For more information, please contact Lisa Elliott at Easterly Investor Relations at (713) 529-6600 or email lisae@easterly.com.

South Texas Drilling & Exploration, Inc. provides contract land drilling services under the name Pioneer Drilling Co., Ltd. to independent and major oil and gas operators drilling wells in central, south and east Texas. The Company's fleet consists of 18 land drilling rigs that can reach depths of 8,000-18,000 feet. South Texas Drilling also has another 1700-hp technologically advanced land rig under construction and a newly acquired National 110UE 1500-hp being refurbished.

This press release contains various forward-looking statements and information that are based on management's belief as well as assumptions made by and information currently available to management. Forward-looking information includes statements regarding the Company's anticipated growth, demand from the Company's customers, capital spending by oil and gas companies and the Company's expectations regarding its new rigs. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it 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 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, 2001.

   SOUTH TEXAS DRILLING & EXPLORATION, INC.
   Statements of Operations - Unaudited
                                                  Three Months Ended
                                               6/30/01           6/30/00
  Revenues:
     Contract drilling                        $18,267,805        $8,804,995
     Other                                         98,875            63,257
    Total operating revenues                   18,366,680         8,868,252
  Costs & Expenses:
    Contract drilling                          10,723,944         7,476,451
    Depreciation                                1,612,319           512,466
    General & adm.                                738,116           195,021
     Total operating costs                     13,074,379         8,183,938
  Operating profit (loss)                       5,292,301           684,314
  Other income (expense):
    Interest expense                             (304,184)         (108,396)
    Interest income                                12,342            87,084
    Other                                             ---               ---
    Total other                                  (291,842)          (21,312)
  Earnings before taxes                         5,000,459           663,002
  Income taxes                                  1,826,210            14,410
  Net income                                    3,174,249           648,592
  Preferred dividends                              60,000            76,000

  Net to common                                $3,114,249          $572,592

  Earnings (loss) per share:
     Basic                                           0.23              0.06
     Diluted                                         0.20              0.05
  Weighted average number of shares
   outstanding:
        Basic                                  13,357,459         9,336,071
        Diluted                                16,188,765        12,356,231
  Operating statistics:
     Utilization rate                               98.0%             83.0%
     Revenue days                                   1,441               606
     Drilling margin                           $7,543,861        $1,328,544
     Drilling margin/day                           $5,235            $2,192
     Drilling margin % of revenue                   41.1%             15.0%
     EBITDA                                    $6,904,620        $1,196,780
     EBITDA as % of revenues                        37.6%             13.5%


   SOUTH TEXAS DRILLING & EXPLORATION, INC.
   Condensed Consolidated Balance Sheet - Unaudited
                                               6/30/01           3/31/01
                 Assets
  Total current assets                        $10,510,887         8,252,184
  Net property, plant and equipment            52,797,076        48,194,458
  Other assets                                     36,393            46,322
  Total assets                                $63,344,356        56,492,964

         Liabilities and Equity
  Total current liabilities                   $18,184,271        23,431,378
  Long-term debt                                9,685,573        10,055,621
  Deferred taxes                                5,259,454         5,179,203
  Total shareholders equity                    30,215,058        17,826,762
                                              $63,344,356        56,492,964