Pioneer Drilling Reports Fiscal Fourth Quarter And Year End 2004 Results
Fourth quarter revenues were up 33 percent Fourth quarter net income was $0.02 per diluted share
Jun 23, 2004
JUNE 23, 2004 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the three months and twelve months ended March 31, 2004.
Revenues for the fiscal fourth quarter of 2004 were $33.4 million, compared to revenues of $25.1 million in the fourth quarter of 2003. Net earnings in the fourth quarter of 2004 were $409,000, or $0.02 per diluted share, versus a net loss of $1.9 million, or $0.11 loss per share, during the fourth quarter of 2003.
Revenue days were 2,496 days during the fourth quarter of fiscal 2004 compared to 1,808 days for the fourth quarter of fiscal 2003. Average rig utilization for the fourth quarter was 91 percent, up from 84 percent in the same period last year.
Wm. Stacy Locke, Pioneer’s President and Chief Executive Officer, stated, “We ended the fiscal year with a strong fourth quarter. By all measures – utilization, revenue days, operating income and earnings – we showed improvement in the fourth quarter over the third quarter. We are pleased that operating income was sufficient to have generated our first net earnings in eight quarters.” “We are optimistic about what we observe in each of our three markets. Demand for rigs continues to improve, thereby allowing us to gradually increase dayrates and profitability on turnkey contracts. With continued strong commodity prices, particularly natural gas prices, we see no reason why the current trends will not continue.”
“Over the last several years we have maintained a focus on growth and intend to continue to look for strategic and financially attractive growth opportunities. During our last fiscal year, we increased our rig fleet by 46 percent, from 24 to 35 drilling rigs, in four separate acquisitions, two of
which allowed the Company to expand geographically. We also remained focused on achieving favorable returns on our investment in equipment and are pleased to have added the 11 rigs in fiscal 2004, at an average cost of $2.1 million per rig,” concluded Mr. Locke.
CONTACTS:
Wm. Stacy Locke, President & CEO
Pioneer Drilling Company
210-828-7689
Ken Dennard / ksdennard@drg-e.com
Lisa Elliott / lelliott@drg-e.com
DRG&E / 713-529-6600
Revenues for the twelve months of fiscal year 2004 were $107.9 million compared to revenues of $80.2 million for the twelve months of fiscal year 2003. Net loss during the twelve months of 2004 was $1.8 million, or $0.08 loss per share, versus a net loss of $5.1 million, or $0.31 loss per share, during the twelve months of fiscal 2003.
Revenue days were 8,764 days during the full year of fiscal 2004 compared to 6,419 days for fiscal 2003. Average rig utilization during fiscal 2004 was 88 percent, up from 79 percent last year. The Company also announced that its shelf registration statement was declared effective by the SEC on June 22, 2004. That registration statement relates to possible resale of shares of the Company’s common stock by investors who acquired shares in the Company’s February 2004 private placement.
Pioneer Drilling’s management team will be holding a conference call on Wednesday, June 23, 2004, at 11:00 a.m. eastern time. To participate in the call, dial (303) 262-2141 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 June 30, 2004.
To access the replay, dial (303) 590-3000 and enter the pass code 580828. 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@drge. 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 Company’s growth opportunities, demand for rigs, continued strong commodity prices, the Company’s ability to increase dayrates and profitability on turnkey contracts, and the Company’s expectations regarding its returns on investment in equipment and trends in the Company’s markets. 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, 2003 and subsequent Form 10-Q.
(1) We define EBITDA as earnings before interest income (expense), taxes,
depreciation and amortization. Although not prescribed under GAAP, we
believe the presentation of EBITDA is relevant and useful because it
helps our investors understand our operating performance and makes it
easier to compare our results with those of other companies that have
different financing, capital or tax structures. EBITDA should not be
considered in isolation from or as a substitute for net income, as an
indication of operating performance or cash flows from operating
activities or as a measure of liquidity. A reconciliation of net
income to EBITDA is included in the operating statistic table in this
press release. EBITDA, as we calculate it, may not be comparable to
EBITDA measures reported by other companies. In addition, EBITDA does
not represent funds available for discretionary use.
(2) Drilling Services margin represents contract drilling revenues less
contract drilling operating costs. Production Services margin
represents production services revenues less production services
operating costs. We believe that Drilling Services margin and
Production Services margin are useful measures for evaluating
financial performance, although they are not measures of financial
performance under generally accepted accounting principles. However,
Drilling Services margin and Production Services margin are common
measures of operating performance used by investors, financial
analysts, rating agencies and Pioneer management. A reconciliation of
Drilling Services margin and Production Services margin to net
earnings is included in the operating statistics table in this press
release. Drilling Services margin and Production Services margin as
presented my not be comparable to other similarly titled measures
reported by other companies.
- Financial Statements Follow -
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
June 30, March 31, June 30,
2008 2007 2008 2008 2007
Revenues $152,547 $102,779 $113,397 $265,944 $206,126
Costs and Expenses:
Operating Costs 86,193 62,388 70,426 156,619 121,578
Depreciation 20,580 16,098 17,119 37,699 30,834
Selling, general and
administrative 12,150 4,724 7,722 19,872 8,547
Bad debt expense
(recovery) (92) - 135 43 -
Total operating
costs 118,831 83,210 95,402 214,233 160,959
Operating income 33,716 19,569 17,995 51,711 45,167
Other income (expense):
Interest expense (4,265) (1) (1,574) (5,839) (1)
Interest income 205 862 585 790 1,743
Other (930) 20 1,092 162 28
Total other (4,990) 881 103 (4,887) 1,770
Income before taxes 28,726 20,450 18,098 46,824 46,937
Income tax expense (9,609) (7,362) (6,250) (15,859) (16,631)
Net earnings $19,117 $13,088 $11,848 $30,965 $30,306
Earnings per share:
Basic $0.38 $0.26 $0.24 $0.62 $0.61
Diluted $0.38 $0.26 $0.24 $0.61 $0.60
Weighted average number
of shares outstanding:
Basic 49,789 49,634 49,759 49,774 49,627
Diluted 50,483 50,212 50,291 50,369 50,167
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
June 30, 2008 December 31, 2007
Assets (unaudited) (audited)
Current assets:
Cash and cash equivalents $18,069 $76,703
Receivables, net 78,838 47,370
Contract drilling in progress 14,398 7,861
Deferred income taxes 6,243 3,670
Inventory 3,159 1,180
Prepaid expenses and other 5,854 5,073
Total current assets 126,561 141,857
Net property and equipment 575,344 417,022
Deferred income taxes 638 573
Goodwill 172,228 -
Other long-term assets 42,294 760
Total assets $917,065 $560,212
Liabilities and Equity
Current liabilities:
Current maturities of long-term
debt $13,811 $-
Accounts payable 25,251 21,424
Income tax payable 3,640
Prepaid drilling contracts 1,789 1,933
Accrued expenses 35,291 18,693
Total current liabilities 79,782 42,050
Long-term debt 271,820 -
Other non-current liabilities 5,580 254
Deferred taxes 54,618 46,836
Total liabilities 411,800 89,140
Total shareholders' equity 505,265 471,072
Total liabilities and shareholders'
equity $917,065 $560,212
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six months ended
June 30,
2008 2007
Cash flows from operating
activities:
Net earnings $30,965 $30,306
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and amortization 37,699 30,834
Allowance for doubtful accounts 320 -
Loss (gain) on dispositions of
property and equipment (377) 1,434
Stock-based compensation
expense 1,848 1,662
Deferred income taxes 2,919 8,157
Change in other assets 256 5
Change in non-current
liabilities (168) (70)
Changes in current assets and
liabilities 1,964 9,214
Net cash provided by operating
activities 75,426 81,542
Cash flows from investing
activities:
Acquisition of WEDGE, net of
cash acquired (313,610) -
Acquisition of Competition
Wireline, net of cash acquired (26,101) -
Purchases of property and
equipment (58,936) (78,519)
Proceeds from insurance
recoveries 2,301 -
Purchase of auction rate
securities, net (16,475) -
Proceeds from sale of property
and equipment 1,851 1,817
Net cash used in investing
activities (410,970) (76,702)
Cash flows from financing
activities:
Payments of debt (32,170) -
Proceeds from issuance of debt 311,500 -
Debt issuance costs (3,323) -
Proceeds from sale of common
stock 653 217
Excess tax benefit of stock
option exercises 250 73
Net cash provided by financing
activities 276,910 290
Net increase (decrease) in cash and
cash equivalents (58,634) 5,130
Beginning cash and cash equivalents 76,703 74,754
Ending cash and cash equivalents $18,069 $79,884
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(in thousands)
(unaudited)
Three months ended Six months ended
June 30, March 31, June 30,
2008 2007 2008 2008 2007
Drilling Services
Division:
Revenues $109,250 $102,779 $100,041 $209,291 $206,126
Operating costs 64,277 62,388 63,497 127,774 121,578
Drilling services
margin (1) $44,973 $40,391 $36,544 $81,517 $84,548
Average number of
drilling rigs 67.0 65.7 67.0 67.0 65.0
Utilization rate 90% 90% 84% 87% 90%
Revenue days 5,603 5,387 5,186 10,789 10,590
Average revenues per
day $19,498 $19,079 $19,291 $19,399 $19,464
Average operating
costs per day 11,472 11,581 12,244 11,843 11,480
Drilling services
margin per day (2) $8,026 $7,498 $7,047 $7,556 $7,984
Production Services
Division:
Revenues $43,297 $- $13,356 $56,653 $-
Operating costs 21,916 - 6,929 28,845 -
Production services
margin (1) $21,381 $- $6,427 $27,808 $-
EBITDA (3) $53,366 $35,687 $36,206 $89,572 $76,029
Reconciliation of combined Drilling services
margin and Production services margin and
EBITDA to net earnings:
Drilling services
margin $44,973 $40,391 $36,544 $81,517 $84,548
Production services
margin 21,381 - 6,427 27,808 -
Combined margin 66,354 40,391 42,971 109,325 84,548
General and
administrative (12,150) (4,724) (7,722) (19,872) (8,547)
Bad debt (expense)
recovery 92 - (135) (43) -
Other income (expense) (930) 20 1,092 162 28
EBITDA 53,366 35,687 36,206 89,572 76,029
Depreciation (20,580) (16,098) (17,119) (37,699) (30,834)
Interest income
(expense), net (4,060) 861 (989) (5,049) 1,742
Income tax expense (9,609) (7,362) (6,250) (15,859) (16,631)
Net earnings $19,117 $13,088 $11,848 $30,965 $30,306
(1) Drilling services margin represents contract drilling revenues less
contract drilling operating costs. Production services margin
represents production services revenue less production services
operating costs. Pioneer believes that Drilling services margin and
Production services margin are useful measures for evaluating
financial performance, although they are not measures of financial
performance under generally accepted accounting principles. However,
Drilling services margin and Production services margin are common
measures of operating performance used by investors, financial
analysts, rating agencies and Pioneer's management. A reconciliation
of Drilling services margin and Production services margin to net
earnings is included in the operating statistics table. Drilling
services margin and Production services margin as presented may not
be comparable to other similarly titled measures reported by other
companies.
(2) Drilling services margin per revenue day represents the Drilling
Services Division's average revenue per revenue day less average
operating costs per revenue day.
(3) We define EBITDA as earnings before interest income (expense), taxes,
depreciation and amortization. Although not prescribed under GAAP,
we believe the presentation of EBITDA is relevant and useful because
it helps our investors understand our operating performance and makes
it easier to compare our results with those of other companies that
have different financing, capital or tax structures. EBITDA should
not be considered in isolation from or as a substitute for net
income, as an indication of operating performance or cash flows from
operating activities or as a measure of liquidity. A reconciliation
of net income to EBITDA can be found later in the release. EBITDA,
as we calculate it, may not be comparable to EBITDA measures reported
by other companies. In addition, EBITDA does not represent funds
available for discretionary use.
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Capital Expenditures
(in thousands)
Budget
Fiscal
Year
Six months Ending
Three months ended ended December
June 30, March 31, June 30, 31,
2008 2007 2008 2008 2007 2008
Capital expenditures:
Drilling Services
Division:
Routine rigs $3,814 $4,874 $4,007 $7,821 $9,598 $21,200
Discretionary 13,704 9,516 19,014 32,718 21,743 47,600
Tubulars 3 1,858 1,047 1,050 5,447 12,600
New-builds and
acquisitions 1,087 35,658 746 1,833 45,145 20,000
Total Drilling
Services Division
capital
expenditures 18,608 51,906 24,814 43,422 81,933 101,400
Average routine
rig capital
expenditures
per revenue day (1) $681 $905 $773 $725 $906 $998
Production Services
Division:
Routine 835 - 108 943 - 2,030
New-builds and
acquisitions 6,008 - 3,031 9,039 - 39,800
Total Production
Services Division
capital
expenditures 6,843 - 3,139 9,982 - 41,830
Total capital
expenditures $25,451 $51,906 $27,953 $53,404 $81,933 $143,230
(1) Average routine rig capital expenditures per revenue day represents
the Drilling Services Division's routine rig capital expenditures
divided by the number of revenue days for each period presented.
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Drilling Rig, Workover Rig and Wireline Unit Information
Rig Type
Mechanical Electric Total Rigs
Drilling Services Division:
Drilling 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 14 17
Total 41 28 69
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 19 22
Total 41 28 69
Production Services Division:
Workover rig horsepower ratings:
400 HP 1
550 HP 61
600 HP 4
Total 66
Wireline units 51
Fishing & Rental Tools Inventory $14 Million
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