Pioneer Drilling Reports Fiscal First Quarter 2008 Results

First quarter revenues up 10% to $102.8 million Announces international expansion

Aug 2, 2007

August 2, 2007 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the three months ended June 30, 2007, which is the first quarter of its 2008 fiscal year.

Revenues for the first quarter of fiscal 2008 grew to $102.8 million, compared to revenues of $93.5 million for the first quarter of fiscal 2007. This 10% increase in revenues was generated primarily by a 16% increase in the number of rigs in Pioneer Drilling’s fleet during the period from an average of 56.7 rigs in the first quarter of fiscal 2007 to an average of 65.7 rigs.

 

Average revenue per revenue day for all types of contracts was $19,079 in the first quarter of fiscal 2008 compared to $19,154 per day in the first quarter of fiscal 2007. Average drilling margin(1) per revenue day was $7,237 in the first quarter of fiscal 2008, down from $9,004 in the first quarter of fiscal 2007. Net earnings for the first quarter of fiscal 2008 were $13.1 million, or $0.26 per diluted share, compared to net earnings of $19.5 million, or $0.39 per diluted share, for the first quarter of fiscal 2007.

 

Revenue days during the first quarter of fiscal 2008 increased to 5,387, compared to 4,881 revenue days for the first quarter of fiscal 2007. Pioneer Drilling’s rig utilization rate was 90% for the first quarter of fiscal 2008, down from 95% in the first quarter of fiscal 2007.

 

Currently, 25 of the Company’s 66 rigs, or 38%, are operating under term contracts of six months to two years. Five of the term contracts will expire in the current quarter, and an additional six will expire during the third quarter of fiscal 2008. Term contracts cover approximately 3,126 revenue days, or 31%, of the remainder of calendar 2007 and 3,059 revenue days, or 13%, of calendar 2008.

 

Wm. Stacy Locke, Pioneer Drilling’s President and Chief Executive Officer, stated, “We are pleased to announce that our 66th rig, the last of our 15-rig new build program, began operations under a three year term contract in Utah at the end of April 2007. We believe ourmodern rig fleet positions us well for sustained earnings through the current tenuous market conditions. While dayrates appear to be leveling off, as compared to the steep declines which began in December 2006, they continue to be soft and will likely continue to drift lower until natural gas prices improve and/or excess rigs in the U.S. are absorbed.”

 

“In addition, we have initiated our expansion into the international market, which is not experiencing the same softness as the domestic market. We recently acquired two newly-built 1500 horsepower SCR rigs and contracted for the purchase of a third 1500 horsepower SCR rig. These rigs are the first of our fleet designated for our Latin America expansion. We are excited to announce the execution of our first drilling contract in South America. The rig is currently moving to its first location south of Bogotá, Colombia, and should begin operations at the end of August. Based on the status of current negotiations and outstanding bids, we believe that our remaining two rigs designated for Latin America will begin operations later this year or early next year,” added Mr. Locke.

 

“We believe we are well positioned to take advantage of the international market, where demand remains strong and the supply of rigs is tight,” continued Mr. Locke, “Our solid domestic exposure and continuing strong cash flow provides the foundation for a successful international effort. As we successfully establish our initial base of operations in Colombia, we intend to prudently expand our international operations into other parts of Latin America. Our expansion into Colombia and other Latin American countries provides the possibility of increased drilling margins during the challenging period we are facing in the U.S., geographical diversification and access to a new customer base.”

 

Pioneer Drilling Conference Call

Pioneer Drilling’s management team will hold a conference call today, Thursday, August 2, at 2:00 p.m. eastern time (1:00 p.m. Central), to discuss these results. To participate in the call, dial (303) 262-2142 at least 10 minutes before the conference call begins and ask for the Pioneer Drilling conference call. A replay of the call will be available approximately two hours after the call ends and will be accessible until August 9, 2007. To access the replay, dial (303) 590-3000 and enter the pass code 11093228#.

 

Investors, analysts and the general public can listen to the conference call over the Internet by accessing Pioneer Drilling’s Web site at http://www.pioneerdrlg.com. To listen to the live call on the Web, please visit Pioneer Drilling’s Web site at least 10 minutes early to register, download and install any necessary audio software. An archive will be available shortly after the call. For more information, please contact Donna Washburn at DRG&E at (713) 529- 6600 or e-mail dmw@drg-e.com.

 

About Pioneer Drilling

Pioneer Drilling provides land contract drilling services to independent and major oil and gas operators drilling wells in Texas, Louisiana, Oklahoma, Kansas and in the Rocky Mountain region. Its fleet consists of 68 land drilling rigs that drill in depth ranges between 6,000 and 18,000 feet.

 

Cautionary Statement Regarding Forward-Looking Statements

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. These forward-looking statements speak only as of the date of this press release. Pioneer Drilling disclaims any obligation to update these statements and cautions you not to rely unduly on them. Forward-looking information includes, but is not limited to, statements regarding acquiring rigs for operations in South America and obtaining contracts for those rigs with customers in Colombia and other South American markets, the effect of Pioneer Drilling’s expansion into Latin American markets on its results of operations, future natural gas price trends, future dayrates, future demand and market competitiveness of Pioneer Drilling’s rig fleet, including our ability to continue to obtain term contracts, the future employment of Pioneer Drilling’s rig fleet, overall market demand and utilization rates for rigs.

 

Although the management of Pioneer Drilling believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that those expectations will prove to have been correct. Such statements are subject to various risks, uncertainties and assumptions, including, among other things: general and regional economic conditions; the level of activity in the industry; development of adequate management infrastructure; departure of key personnel; access to labor; competitive factors; government regulations; exposure to environmental and other liabilities; adverse weather; and general risks related to the industry and markets in which Pioneer Drilling operates.

 

Should one or more of those 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 Pioneer Drilling’s filings with the Securities and Exchange Commission (the “SEC”), including the Pioneer Drilling’s annual report on Form 10-K for the fiscal year ended March 31, 2007 and subsequent filings with the SEC.

_____________________

  (1) Drilling margin represents contract drilling revenues less contract
      drilling costs. Pioneer Drilling believes that drilling margin is a
      useful measure for evaluating its financial performance, although it
      is not a measure of financial performance under generally accepted
      accounting principles.  However, drilling margin is a common measure
      of operating performance used by investors, financial analysts, rating
      agencies and Pioneer Drilling's management.  A reconciliation of
      drilling margin to net earnings is included in the operating
      statistics table below in this release.  Drilling margin as presented
      may not be comparable to other similarly titled measures reported by
      other companies.

      The forecasted capital expenditures set forth below contain
      assumptions management believes are reasonable, based on information
      available as of the date of this news release.  Pioneer Drilling is
      not undertaking any obligation to update this forecasted information
      as conditions change or as additional information becomes available.
      There can be no assurance that any of the forecast estimates can or
      will be achieved.


   Contacts: Joyce Schuldt, Executive VP & CFO
             Pioneer Drilling Company
             210-828-7689

             Ken Dennard / ksdennard@drg-e.com
             Lisa Elliott / lelliott@drg-e.com
             DRG&E / 713-529-6600



                 PIONEER DRILLING COMPANY AND SUBSIDIARIES
              Condensed Consolidated Statements of Operations
                   (in thousands, except per share data)

                                         Three Months Ended (unaudited)
                                                June 30,         March 31,
                                            2007        2006       2007
  Revenues:
    Contract drilling                     $102,779    $93,493    $103,347

  Costs and Expenses:
    Contract drilling                       63,792     49,543      60,406
    Depreciation                            16,098     11,570      14,736
    General and administrative               3,320      2,925       2,607
      Total operating costs                 83,210     64,038      77,749

  Operating income                          19,569     29,455      25,598

  Other income (expense):
    Interest expense                            (1)       (63)        ---
    Interest income                            862      1,098         881
    Other                                       20         23           8
      Total other                              881      1,058         889

  Income before income taxes                20,450     30,513      26,487

  Income tax expense                        (7,362)   (11,027)     (9,269)

  Net earnings                             $13,088    $19,486     $17,218

  Earnings per share:
        Basic                                $0.26      $0.39       $0.35
        Diluted                              $0.26      $0.39       $0.34

  Weighted average number of shares
   outstanding:
        Basic                               49,634     49,592      49,619
        Diluted                             50,212     50,168      50,127



                  PIONEER DRILLING COMPANY AND SUBSIDIARIES
                    Condensed Consolidated Balance Sheets
                               (in thousands)

                                             (Unaudited)
                                            June 30, 2007     March 31, 2007
                 Assets
  Current assets:
     Cash and cash equivalents                   $79,884           $84,945
     Receivables, net                             53,012            57,698
     Contract drilling in progress                10,615             9,837
     Deferred income taxes                         2,542             2,175
     Prepaid expenses                              2,918             3,653
        Total current assets                     148,971           158,308

  Net property and equipment                     377,526           342,901
  Other assets                                       272               286
  Total assets                                  $526,769          $501,495

         Liabilities and Equity
  Current liabilities:
     Accounts payable                            $21,529           $18,626
     Federal income taxes payable                  5,874               ---
     Prepaid drilling contracts                      140               ---
     Accrued expenses                             15,266            15,593
        Total current liabilities                 42,809            34,219
  Other non-current liability                        361               346
  Deferred taxes                                  41,166            38,821
        Total liabilities                         84,336            73,386
  Total shareholders' equity                     442,433           428,109
  Total liabilities and shareholders'
   equity                                       $526,769          $501,495



                 PIONEER DRILLING COMPANY AND SUBSIDIARIES
                            Operating Statistics
                               (in thousands)
                                (unaudited)

                                                 Three Months Ended
                                               June 30,         March 31,
                                           2007       2006        2007

     Revenues by contract:
        Daywork contracts                  $98,427    $90,061     $96,915
        Turnkey contracts                      853        ---       3,445
        Footage contracts                    3,499      3,432       2,987
        Total                             $102,779    $93,493    $103,347

     Drilling costs by contract:
        Daywork contracts                  $60,084    $47,480     $54,856
        Turnkey contracts                      741        ---       2,615
        Footage contracts                    2,967      2,063       2,935
        Total                              $63,792    $49,543     $60,406

     Drilling margin by
       contract (1) (2):
        Daywork contracts                  $38,343    $42,581     $42,059
        Turnkey contracts                      112        ---         830
        Footage contracts                      532      1,369          52
        Total                              $38,987    $43,950     $42,941

     (1) Reconciliation of drilling
         margin to net earnings:
        Drilling margin                    $38,987    $43,950     $42,941
        Depreciation                       (16,098)   (11,570)    (14,736)
        General and administrative          (3,320)    (2,925)     (2,607)
        Other income (expense)                 881      1,058         889
        Income tax expense                  (7,362)   (11,027)     (9,269)
        Net earnings                       $13,088    $19,486     $17,218

     (2) Drilling margins represent drilling revenues less contract
         drilling costs.



                  PIONEER DRILLING COMPANY AND SUBSIDIARIES
                            Operating Statistics
                                 (unaudited)


                                                  Three Months Ended
                                                June 30,          March 31,
                                            2007        2006        2007

     Average number of rigs                   65.7        56.7        64.3
     Utilization rate                          90%         95%         91%

     Revenue days by contract:
        Daywork contracts                    5,130       4,695       4,911
        Turnkey contracts                       27         ---          81
        Footage contracts                      230         186         211
        Total                                5,387       4,881       5,203

     Average revenues per day:
        Daywork contracts                  $19,187     $19,182     $19,734
        Turnkey contracts                  $31,593        $---     $42,531
        Footage contracts                  $15,213     $18,452     $14,156
        All contracts                      $19,079     $19,154     $19,863

     Average costs per day:
        Daywork contracts                  $11,712     $10,113     $11,170
        Turnkey contracts                  $27,444        $---     $32,284
        Footage contracts                  $12,900     $11,091     $13,910
        All contracts                      $11,842     $10,150     $11,610

     Drilling margin per day (3):
        Daywork contracts                   $7,474      $9,069      $8,564
        Turnkey contracts                   $4,148        $---     $10,247
        Footage contracts                   $2,313      $7,360        $246
        All contracts                       $7,237      $9,004      $8,253

  (3) Drilling margin per revenue day represents average revenue per
      revenue day less average cost per revenue day.



                  PIONEER DRILLING COMPANY AND SUBSIDIARIES
                             Capital Expenditures
                                (in thousands)

                                                                    Budget
                                                                     Year
                                             Three Months Ended     Ending
                                            June 30,     March 31, March 31,
                                          2007     2006     2007      2008
  Capital expenditures:

     Routine rig                         $4,874   $2,843   $4,724   $18,739
     Average per revenue day               $904     $582     $908

     Discretionary:
       Rig upgrades                      $4,377  $10,467   $3,183   $15,400
       Iron roughnecks and topdrives      1,976      ---    3,602    18,250
       Spare equipment                    2,158    1,221    1,736     3,500
       Other                              1,005      679    3,706     5,400
         Total discretionary             $9,516  $12,367  $12,227   $42,550

     Tubulars                            $1,858   $2,785   $3,589   $16,450

         Total routine, discretionary
          and tubulars                  $16,248  $17,995  $20,540   $77,739


     New-builds and acquisitions         35,658   25,126    9,487    56,000

           Total capital expenditures   $51,906  $43,121  $30,027  $133,739



                  PIONEER DRILLING COMPANY AND SUBSIDIARIES
                               Rig Information

                                                 Rig Type
                                         Mechanical    Electric   Total Rigs

  Rig horsepower ratings:
      550 to 700 HP                              6         ---           6
      750 to 900 HP                             15           2          17
      1000 HP                                   17          12          29
      1200 to 1500 HP                            3          11          14
          Total                                 41          25          66

  Rig drilling depth ratings:
      Less than 10,000 feet                      8           2          10
      10,000 to 13,900 feet                     30           7          37
      14,000 to 18,000 feet                      3          16          19
          Total                                 41          25          66

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