Pioneer Drilling Company (AMEX: PDC) today reported results for the quarter and six months ended September 30, 2004.

Second quarter revenues were up 76 % Second quarter net income was $0.03 per diluted share

Nov 4, 2004

NOVEMBER 4, 2004 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the quarter and six months ended September 30, 2004.

Revenues for the second quarter of fiscal 2005 grew to $42.8 million, compared to revenues of $24.2 million in the second quarter of fiscal 2004. This 76% increase in revenues was due to an improvement in rig revenue rates, a 37% increase in the average number of rigs in Pioneer’s fleet and an 11% increase in Pioneer’s rig utilization rate. Net earnings in the second quarter of 2005 were $923,000, or $0.03 per diluted share, versus a net loss of $621,000, or $0.03 loss per share, during the second quarter of fiscal 2004.

 

Revenue days during the second quarter of fiscal 2005 grew 53% to 3,166, compared to 2,064 revenue days for the second quarter of fiscal 2004. Revenue days by type of contract in the second quarter of 2005 were 1,674 days for daywork contracts, 1,347 for turnkey contracts and 145 for footage contracts. Pioneer’s rig utilization rate increased 11% for the fiscal second quarter to 96%, up from 85% in the corresponding period last year.

 

Wm. Stacy Locke, Pioneer’s President and Chief Executive Officer, stated, “This quarter marks a turning point for Pioneer Drilling. At September 30, we were essentially debt-free and had positive working capital of $14.5 million. In addition, average dayrates increased approximately $500 per day, or 6%, to approximately $9,100, up from average dayrates of approximately $8,600 for the quarter ending June 30, 2004. We anticipate that average dayrates will increase another 10% or more in our third fiscal quarter ending December 31, 2004.

 

Turnkey contracts comprised 43% of our revenue days in our fiscal second quarter, and we anticipate that this percentage will continue to gradually decline as dayrates improve.”

 

Revenues for the first six months of fiscal year 2005 were $83.5 million, compared to revenues of $48.1 million for the first six months of fiscal year 2004. Net earnings during the first six months of 2005 were $1.1 million, or $0.04 per share, compared to a net loss of $1.7 million, or $0.08 loss per share, during the first six months of fiscal 2004.

 

Revenue days were 6,163 days during the first half of fiscal 2005, compared to 4,022 days for the comparable period of fiscal 2004. Pioneer’s rig utilization rate for the first si months of fiscal 2005 was 94%, up from 86% in last year’s first half.

 

Pioneer’s management team will be holding a conference call on Thursday, November 4, 2004, at 11:00 a.m. eastern time to discuss these results. To participate in the call, dial (303) 262-2211 at least ten 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 November 11, 2004. To access the replay, dial (303) 590-3000 and enter the pass code 11012216#.

 

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. To listen to the live call on the Web, please visit Pioneer Drilling’s 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 Karen Roan at DRG&E at (713) 529-6600 or email kcroan@drg-e.com.

 

Pioneer Drilling Company provides land contract drilling services to independent and major oil and gas operators drilling wells in North, East and South Texas and North Louisiana. Pioneer’s fleet consists of 36 land drilling rigs that drill in depth ranges between 8,000 and 18,000 feet.

 

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 anticipated continuing increases in average dayrates and the gradual decline in turnkey contract revenue days as dayrates improve. 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 turnkey drilling contracts in progress. 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, including the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2004.

                          -  Tables to Follow -


                PIONEER DRILLING COMPANY AND SUBSIDIARIES
             Condensed Consolidated Statements of Operations

                  (In thousands, except per share data)
                               (Unaudited)

                                Three Months Ended       Six Months Ended
                           9/30/04   9/30/03   6/30/04   9/30/04   9/30/03

  Contract drilling
   revenues                $42,783   $24,244   $40,719   $83,502   $48,094

  Costs and Expenses:
    Contract drilling       34,591    19,791    33,855    68,445    40,158
    Depreciation             5,306     3,927     5,048    10,355     7,552
    General and
     administrative            926       692       770     1,696     1,339
    Total operating costs   40,823    24,410    39,673    80,496    49,049

  Operating income (loss)    1,960      (166)    1,046     3,006      (955)

  Other income (expense):
    Interest expense          (398)     (700)     (718)   (1,116)   (1,433)
    Loss on early
     extinguishment of debt   (101)      ---       ---      (101)      ---
    Interest income             40        29        24        64        76
    Other                       12        31         3        15        40
    Total other               (447)     (640)     (691)   (1,138)   (1,317)

  Income (loss) before
   taxes                     1,513      (806)      355     1,868    (2,272)

  Income tax benefit
   (expense)                  (590)      185      (138)     (728)      594

  Net earnings (loss)         $923     $(621)     $217    $1,140   $(1,678)

  Earnings (loss) per share:
    Basic                    $0.03    $(0.03)    $0.01     $0.04    $(0.08)
    Diluted                  $0.03    $(0.03)    $0.01     $0.04    $(0.08)

  Weighted average number
   of shares outstanding:
    Basic                   33,211    22,037    27,300    30,272    21,873
    Diluted                 34,271    22,037    28,274    31,289    21,873


                PIONEER DRILLING COMPANY AND SUBSIDIARIES
                           Operating Statistics
                 (In thousands, except averages per day)
                               (Unaudited)

                            Three Months Ended             Six Months Ended
                      9/30/04    9/30/03      6/30/04     9/30/04    9/30/03

  Average number
   of rigs               36.0       26.3         35.3        35.7       25.4
  Utilization rate        96%        85%          93%         94%        86%

  Revenue days by
   contract:
    Daywork contracts   1,674      1,362        1,477       3,151      2,548
    Turnkey contracts   1,347        610        1,376       2,723      1,319
    Footage contracts     145         92          144         289        155
    Total               3,166      2,064        2,997       6,163      4,022

  Revenues by contract:
    Daywork contracts $17,277    $11,832      $14,141     $31,418    $21,628
    Turnkey contracts  23,821     11,258       24,619      48,440     24,562
    Footage contracts   1,685      1,154        1,959       3,644      1,904
    Total             $42,783    $24,244      $40,719     $83,502    $48,094

  Drilling costs by
   contract:
    Daywork contracts $13,743    $10,131      $11,529     $25,272    $18,849
    Turnkey contracts  19,476      8,872       20,861      40,336     19,869
    Footage contracts   1,372        788        1,465       2,837      1,440
    Total             $34,591    $19,791      $33,855     $68,445    $40,158

  Average revenues
   per day:
    Daywork contracts $10,321     $8,687       $9,574      $9,971     $8,488
    Turnkey contracts  17,684     18,456       17,892      17,789     18,622
    Footage contracts  11,621     12,543       13,602      12,609     12,284
    Total             $13,513    $11,746      $13,587     $13,549    $11,958

  Average costs
   per day:
    Daywork contracts  $8,210     $7,438       $7,806      $8,020     $7,398
    Turnkey contracts  14,459     14,544       15,160      14,813     15,064
    Footage contracts   9,462      8,565       10,171       9,817      9,290
    Total             $10,926     $9,589      $11,296     $11,106     $9,985

  Capital
   expenditures:
    Rig additions      $1,628     $8,822       $2,614      $4,242    $14,502
    Other               7,296      1,792        5,802      13,098      3,042
                       $8,924    $10,614       $8,416     $17,340    $17,544


                PIONEER DRILLING COMPANY AND SUBSIDIARIES
                  Condensed Consolidated Balance Sheets

                              (In thousands)

                                                (Unaudited)
                                                 9/30/2004      3/31/2004
                   Assets
  Current assets:
    Cash and cash equivalents                      $11,073         $6,366
    Receivables, net                                20,047         10,902
    Contract drilling in progress                    5,499          9,131
    Current deferred income taxes                      403            285
    Prepaid expenses                                   476          1,336
      Total current assets                          37,498         28,020
  Net property, plant and equipment                121,929        115,342
  Other assets                                         263            369
  Total assets                                    $159,690       $143,731

           Liabilities and Equity
  Current liabilities:
    Notes payable                                     $---           $558
    Current portion of long-term debt                  110          3,865
    Accounts payable                                17,822         13,271
    Accrued expenses                                 5,081          4,298
      Total current liabilities                     23,013         21,992
  Long-term debt                                        60         44,892
  Deferred taxes                                     6,887          6,011
      Total liabilities                             29,960         72,895
  Total shareholders' equity                       129,730         70,836
  Total liabilities and shareholders' equity      $159,690       $143,731

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