Pioneer Drilling to acquire Rocky Mountain Drilling Business

Nov 11, 2004

NOVEMBER 11, 2004 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today announced that it has signed an asset purchase agreement to acquire a fleet of seven drilling rigs and related equipment from Wolverine Drilling, Inc. for $28 million in cash. Wolverine, based in Kenmare, North Dakota, owns a fleet of seven mechanical 500 to 1000 horsepower rigs, capable of drilling to depths of 7,000 to 15,000 feet. Robert S. Blackford, President of Wolverine, will become Pioneer’s North Dakota Division Manager. The transaction is expected to close in early December 2004, increasing the Company’s fleet size to 43 drilling rigs.

Wm. Stacy Locke, Pioneer Drilling’s Chief Executive Officer, stated, “We are very excited about expanding our operations into the prolific oil and gas regions of the Rocky Mountains. Wolverine has operated in the Rockies since 1994 and has a significant presence in the Williston Basin of North Dakota and Montana. Six of the seven rigs are currently working under contract and we anticipate that the fleet utilization will remain high for the foreseeable future. Presently, three of the rigs are drilling in North Dakota, two are working in Montana and one is drilling in Colorado. The seventh rig is undergoing an upgrade and refurbishment in the Kenmare yard and is scheduled to be operational by mid-December.”

Mr. Locke commented further: “We are pleased to have Bob Blackford join the Company. Bob has been instrumental in establishing Wolverine as a first rate drilling contractor, while also growing Wolverine’s fleet from two rigs to seven rigs. Having Bob and his management team on board will make for a smooth transition. In addition, we are planning to add an eighth rig to the North Dakota Division next month, which will bring our total fleet size to 44 rigs. The rig, which is nearly complete, is being constructed of new and refurbished equipment and will be a highly mobile, 1000hp electric rig. We are in the final stages of negotiating a one year contract for our new electric rig with an operator for a drilling program in Utah, near the location where one of Wolverine’s rigs is drilling in Colorado.”

CONTACTS:
Wm. Stacy Locke, CEO
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 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 currently consists of 36 land drilling rigs that drill in depth ranges between 8,000-18,000 feet.

This press release contains various forward-looking statements that are based on management’s belief as well as assumptions made by and information currently available to management. The forward- looking statements include statements regarding the anticipated closing of the acquisition of the seven drilling rigs from Wolverine Drilling, Inc., the anticipated utilization for the fleet of drilling rigs to be acquired, the timing for the rig being upgraded and refurbished to become operational, the addition of an eighth rig to the Rocky Mountain region and the one year contract being negotiated for that rig. 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 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, 2004 and subsequent Form 10-Q’s.

 


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