Pioneer Drilling Announces Reports Record Fiscal Fourth Quarter 2006 Results
Fourth quarter revenues were up 50% to $82.8 million
May 25, 2006
MAY 25, 2006 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the three months and twelve months ended March 31, 2006, which are the fourth quarter and full-year of its fiscal year 2006.
Revenues for the fourth quarter of fiscal 2006 grew to $82.8 million, compared to revenues of $55.4 million for the fourth quarter of fiscal 2005, due to the continued strong demand for rigs in the Company’s operating markets. This 50% increase in revenues was generated by a 34% increase in average revenues per day to $17,622 per day, coupled with a 13% increase in the average number of rigs in Pioneer Drilling’s fleet to 55.3 rigs. Average drilling margin per day increased 97% to $8,259 in the fourth quarter of fiscal 2006 compared to $4,202 in the fourth quarter of fiscal 2005 and sequentially increased 24% from the third quarter of fiscal 2006. Net earnings for the fourth quarter of fiscal 2006 were $18.0 million, or $0.36 per diluted share, compared to net earnings of $5.5 million, or $0.14 per diluted share, for the fourth quarter of fiscal 2005. Weighted average shares of common stock outstanding on a diluted basis increased 23% to 49.1 million shares for the fourth quarter of fiscal 2006 from 40.0 million shares for the fourth quarter of fiscal 2005.
Revenue days during the fourth quarter of fiscal 2006 increased 12% to 4,701, compared to 4,207 revenue days for the fourth quarter of fiscal 2005. In the fourth quarter of fiscal 2006, revenue days by type of contract were 4,503 for daywork contracts, zero for turnkey contracts and 198 for footage contracts. In contrast, revenue days by type of contract in the fourth quarter of fiscal 2005 were 3,005 for daywork contracts, 804 for turnkey contracts and 398 for footage contracts. Pioneer Drilling’s rig utilization rate was 95% for the fourth quarter of fiscal 2006 compared to 97% in the prior fourth quarter.
Revenues for the twelve months of fiscal year 2006 were $284.1 million, compared to revenues of $185.2 million for the twelve months of fiscal year 2005. Net earnings during the twelve months of fiscal 2006 were $50.6 million, or $1.06 per diluted share, compared to net earnings of $10.8 million, or $0.30 per diluted share, during the twelve months of fiscal 2005.
Revenue days were 18,164 during the twelve months of fiscal 2006, compared to 13,894 revenue days for the comparable period of fiscal 2005. Pioneer Drilling’s rig utilization rate for the twelve months of fiscal 2006 was 95%, compared to 96% in last year’s comparable twelve month period.
Wm. Stacy Locke, Pioneer Drilling’s President and Chief Executive Officer, stated, “We are very pleased with our results throughout our 2006 fiscal year. During the period we broadened our geographic footprint, established new customer relationships and expanded and enhanced our fleet of drilling rigs. As a result, our average drilling margin per day was 92% greater for the 2006 fiscal year compared to a year ago. With demand remaining strong, we intend to continue to expand and strengthen our market position.
“Our 13 rig new-build program remains on track and we completed the third and fourth rig in the program during the fourth quarter. The third rig is a 1500 horsepower diesel electric rig, which began operations in the Williston Basin in January. The fourth rig spudded in the
Piceance Basin in March. This rig was the first of our 1000 horsepower trailer-mounted rigs, which we refer to as our “resource” rig. As of today, the fifth and sixth rig of the new-build program has been completed. A second 1000 horsepower “resource” rig began operations in southeast Oklahoma in April.
In May, one of the “heavy” 1000 horsepower SCR rigs, rated to 15,000 feet, was delivered to Wyoming. Also, in late April we sold one of the lowest horsepower rigs in our fleet. This brings our marketable rig fleet to 57 rigs, with seven more new-build rigs expected to be delivered by the end of this fiscal year,” continued Mr. Locke. “In addition to building new rigs, we have steadily performed major upgrades to rigs which we have acquired over the years. During fiscal 2006, we spent over $21 million upgrading older rigs which included material upgrades to seven rigs. We have budgeted an additional $22 million for rig upgrades in fiscal 2007.”
“As we enter our 2007 fiscal year, we have continued to pursue term contracts,” added Mr. Locke. “Presently, 65% of our fleet is operating under term contracts of six months to two years in length.”
Pioneer Drilling’s management team will be holding a conference call today, Thursday, May 25, 2006, at 11:00 a.m., Eastern time (10:00 a.m., Central), to discuss these results. To participate in the call, dial (303) 262-2055 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 June 1, 2006. To access the replay, dial (303) 590-3000 and enter the pass code 11060355#.
Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by accessing Pioneer Drilling’s Web site at http://www.pioneerdrlg.com Web site at least 10 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live Webcast, an archive will be available shortly after the call. For more information, please contact Karen Roan at DRG . To listen to the live call on the Web, please visit Pioneer Drilling’s&E at (713) 529-6600 or e-mail kcroan@drg-e.com.
Pioneer Drilling provides land contract drilling services to independent and major oil and gas operators drilling wells in Texas, Louisiana, Oklahoma and in the Rocky Mountain region. Its fleet consists of 57 land drilling rigs that drill in depth ranges between 6,000 and 18,000 feet. (1) Drilling margin represents drilling revenues less drilling costs. The Company 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 our management. A reconciliation of drilling margin to net income 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.
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 our intent to continue to expand and strengthen our market position, the anticipated timing for delivery of the rigs we are adding to our fleet, the effects of capital expenditures to upgrade our rigs and our ability to continue to obtain term contracts. Although the management of Pioneer Drilling believes that the expectations reflected in such forward-looking statements are reasonable, Pioneer Drilling 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 matters, risks and uncertainties relating to rig construction difficulties. 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’s filings with the Securities and Exchange Commission (“the SEC”), including the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2005 and subsequent filings with the SEC.
-- Tables to Follow --
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, March 31, March 31,
2005 2006 2005 2006 2005
Revenues:
Contract drilling $74,459 $82,840 $55,357 $284,148 $185,247
Costs and Expenses:
Contract drilling 43,029 44,015 37,681 166,481 138,483
Depreciation 8,598 9,519 6,967 33,387 23,091
General and
administrative 1,545 1,910 1,746 6,523 4,657
Bad debt expense
(recovery) 25 (177) (100) (152) 242
Total operating costs 53,197 55,267 46,294 206,239 166,473
Operating income 21,262 27,573 9,063 77,909 18,774
Other income (expense):
Interest expense (1) (32) (447) (236) (1,722)
Loss on early
extinguishment of debt --- --- --- --- (101)
Interest income 398 720 55 2,069 173
Other 9 32 15 71 37
Total other 406 720 (377) 1,904 (1,613)
Income before taxes 21,668 28,293 8,686 79,813 17,161
Income tax expense (7,876) (10,325) (3,193) (29,246) (6,349)
Net earnings $13,792 $17,968 $5,493 $50,567 $10,812
Earnings per share:
Basic $0.30 $0.37 $0.14 $1.08 $0.31
Diluted $0.29 $0.36 $0.14 $1.06 $0.30
Weighted average number
of shares outstanding:
Basic 46,542 48,337 39,142 46,808 34,544
Diluted 47,326 49,105 40,029 47,506 37,578
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2006 March 31, 2005
Assets
Current assets:
Cash and cash equivalents $91,174 $69,673
Marketable securities --- 1,000
Receivables, net 35,544 26,108
Contract drilling in progress 9,620 5,365
Current deferred income taxes 990 570
Prepaid expenses 2,208 1,877
Total current assets 139,536 104,593
Net property and equipment 260,784 170,566
Other assets 358 850
$400,678 $276,009
Liabilities and Equity
Current liabilities:
Notes payable $--- $682
Current long-term debt --- 4,733
Accounts payable 16,041 15,622
Federal income taxes payable 6,835 196
Prepaid drilling contracts 140 173
Accrued expenses 9,616 6,860
Total current liabilities 32,632 28,266
Long-term debt --- 13,445
Other non-current liability 388 400
Deferred taxes 26,982 12,283
Total liabilities 60,002 54,394
Total shareholders' equity 340,676 221,615
$400,678 $276,009
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, March 31, March 31,
2005 2006 2005 2006 2005
Revenues by contract:
Daywork contracts $67,896 $79,097 $36,720 $252,103 $95,997
Turnkey contracts --- --- 13,976 10,830 80,211
Footage contracts 6,563 3,743 4,661 21,215 9,038
Total $74,459 $82,840 $55,357 $284,148 $185,246
Drilling costs by
contract:
Daywork contracts $37,978 $41,754 $24,015 $143,399 $68,416
Turnkey contracts --- --- 10,268 7,449 63,421
Footage contracts 5,051 2,261 3,398 15,633 6,646
Total $43,029 $44,015 $37,681 $166,481 $138,483
Drilling margin by
contract (A):
Daywork contracts $29,918 $37,343 $12,705 $108,704 $27,581
Turnkey contracts --- --- 3,708 3,381 16,790
Footage contracts 1,512 1,482 1,263 5,582 2,392
Total $31,430 $38,825 $17,676 $117,667 $46,763
Capital expenditures:
Rig additions $22,595 $26,739 $10,072 $72,312 $53,341
Other 18,005 10,489 7,977 56,559 27,047
$40,600 $37,228 $18,049 $128,871 $80,388
Reconciliation of
drilling margin to net
earnings:
Drilling margin $31,430 $38,825 $17,676 $117,667 $46,763
Depreciation (8,598) (9,519) (6,967) (33,387) (23,091)
General and
administrative (1,545) (1,910) (1,746) (6,523) (4,657)
Bad debt (expense)
recovery (25) 177 100 152 (242)
Other income
(expense) 406 720 (377) 1,904 (1,612)
Income tax expense (7,876) (10,325) (3,193) (29,246) (6,349)
Net earnings $13,792 $17,968 $5,493 $50,567 $10,812
(A) Drilling margins represent drilling revenues less drilling costs
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(Unaudited)
Three Months Ended Year Ended
December 31, March 31, March 31,
2005 2006 2005 2006 2005
Average number of rigs 53.3 55.3 49.0 52.3 40.1
Utilization rate 96% 95% 97% 95% 96%
Revenue days by contract:
Daywork contracts 4,269 4,503 3,005 16,138 8,685
Turnkey contracts --- --- 804 558 4,471
Footage contracts 445 198 398 1,468 738
Total 4,714 4,701 4,207 18,164 13,894
Average revenues per day:
Daywork contracts $15,904 $17,565 $12,220 $15,622 $11,053
Turnkey contracts $--- $--- $17,383 $19,409 $17,940
Footage contracts $14,748 $18,904 $11,711 $14,452 $12,247
All contracts $15,795 $17,622 $13,158 $15,643 $13,333
Average costs per day:
Daywork contracts $8,896 $9,272 $7,992 $8,886 $7,877
Turnkey contracts $--- $--- $12,771 $13,349 $14,185
Footage contracts $11,351 $11,419 $8,538 $10,649 $9,005
All contracts $9,128 $9,363 $8,957 $9,165 $9,967
Drilling margin per day:
Daywork contracts $7,008 $8,293 $4,228 $6,736 $3,176
Turnkey contracts $--- $--- $4,612 $6,059 $3,755
Footage contracts $3,398 $7,485 $3,173 $3,802 $3,241
All contracts $6,667 $8,259 $4,202 $6,478 $3,366
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