Pioneer Drilling Reports Fiscal First Quarter Results

First quarter revenues were up 70 percent First quarter net income was $0.01 per diluted share

Aug 4, 2004

AUGUST 4, 2004 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the three months ended June 30, 2004.

Revenues for the first quarter of fiscal 2005 were $40.7 million, compared to revenues of $23.9 million in the first quarter of 2004. Net earnings in the first quarter of 2005 were $217,000, or $0.01 per diluted share, versus a net loss of $1.1 million, or $0.05 loss per share, during the first quarter of 2004.

There were 2,997 revenue days during the first quarter of fiscal 2005, compared to 1,958 revenue days for the first quarter of fiscal 2004. Average rig utilization for the first quarter was 93 percent, up from 87 percent in the corresponding period last year.

Wm. Stacy Locke, Pioneer’s President and Chief Executive Officer, stated, “We experienced a solid quarter, while battling weather in all three of our markets in Texas and lower than anticipated earnings contribution from turnkey operations. Overall, operating income per revenue day from turnkey projects remained positive and, in fact, was higher than operating income per revenue day from daywork projects. However, turnkey operations were not as profitable in the fiscal first quarter as we had experienced throughout fiscal 2004. We are pleased with this utilization rate of 93%, a level we haven’t seen since 2001 when we had less than 20 land rigs in our fleet. Now that our fleet has grown to 36 rigs and our customer demand is quite strong, we expect to benefit from the operating leverage of these additional rigs as utilization is high and dayrates appear to be continuing to increase.”

Pioneer Drilling’s management team will be holding a conference call on Thursday, August 5, 2004, at 9:30 a.m., Eastern time. To participate in the call, dial (303) 262-2143 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 August 12, 2004. To access the replay, dial (303) 590-3000 and enter the pass code 11004875#.

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 expected benefits from the operating leverage of Pioneer Drilling’s additional rigs and the continuing increases in dayrates. 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 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.

                PIONEER DRILLING COMPANY AND SUBSIDIARIES
                         Statements of Operations

                                                      (Unaudited)
                                                   Three Months Ended
                                                 6/30/04       6/30/03
  Revenues:
    Contract drilling                          $40,718,811   $23,850,083

  Costs and Expenses:
    Contract drilling                           33,854,370     20,366,406
    Depreciation and amortization                5,048,317      3,624,181
    General and administrative                     770,141        648,248
      Total operating costs                     39,672,828     24,638,835

  Operating income (loss)                        1,045,983       (788,752)

  Other income (expense):
    Interest expense                              (718,232)      (733,655)
    Interest income                                 23,837         47,690
    Other                                            3,389          8,947
    Total other                                   (691,006)      (677,018)

  Income (loss) before taxes                       354,977     (1,465,770)

  Income tax benefit (expense)                    (138,449)       409,469

  Net earnings (loss)                             $216,528    $(1,056,301)

  Earnings (loss) per share:
    Basic                                            $0.01         $(0.05)
    Diluted                                          $0.01         $(0.05)

  Weighted average number of
   shares outstanding:
    Basic                                       27,300,126     21,707,935
    Diluted                                     28,273,561     21,707,935

  Operating statistics:
    Average number of rigs                            35.3           24.6
    Utilization rate                                   93%            87%
    Revenue days                                     2,997          1,958
    Drilling revenue/revenue day                   $13,587        $12,181
    Drilling cost/revenue day                      $11,296        $10,402
    Capital expenditures:
      Rig additions                             $2,614,051     $5,416,693
      Other                                     $5,801,471     $1,512,857
                                                $8,415,522     $6,929,550


                PIONEER DRILLING COMPANY AND SUBSIDIARIES
                  Condensed Consolidated Balance Sheets

                                                      (Unaudited)
                                                6/30/2004      3/31/2004

                     Assets
  Current assets:
    Cash and cash equivalents                   $5,919,748     $6,365,759
    Receivables, net                            12,571,346     10,901,991
    Contract drilling in progress               10,461,223      9,130,794
    Current deferred income taxes                  271,844        285,384
    Prepaid expenses                               972,149      1,336,337
      Total current assets                      30,196,310     28,020,265
  Net property, plant and equipment            118,543,601    115,341,612
  Other assets                                     354,819        369,278
  Total assets                                $149,094,730   $143,731,155

              Liabilities and Equity
  Current liabilities:
    Notes payable                                 $223,967       $558,070
    Current long-term debt                       3,860,183      3,865,236
    Accounts payable                            17,773,694     13,270,989
    Accrued expenses                             6,087,083      4,297,952
      Total current liabilities                 27,944,927     21,992,247
  Long-term debt                                43,931,131     44,891,674
  Deferred taxes                                 6,165,825      6,010,916
      Total liabilities                         78,041,883     72,894,837
  Total shareholders' equity                    71,052,847     70,836,318
                                              $149,094,730   $143,731,155

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