JUNE 3, 2002 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today announced it has purchased the assets of United Drilling Company and U-D Holdings, L.P. The Company paid $7 million for these assets, which consist of two Ideco H-725 12,000 foot mechanical land drilling rigs, a substantial inventory of spare parts and equipment and five vehicles. These rigs were refurbished in 2001, are in excellent operating condition and have experienced crews.

Additionally, Pioneer has agreed to purchase two National 110-UE 1500HP diesel electric rigs from IDM Equipment, Ltd for approximately $6.0 million each. The rigs, rated to 18,000 feet, will be comprised of primarily new equipment with some components refurbished to like-new condition. Pioneer will provide drill pipe, drill collars, blowout preventers and handling tools to complete the rigs.
These transactions are being financed with a combination of bank debt, mezzanine capital and/or common stock.

Michael E. Little, Pioneer Drilling’s Chairman and Chief Executive Officer, stated, “We are very pleased to add these high quality rigs to our fleet as we continue to execute our growth strategy. The two Ideco H-725 rigs are ready to be deployed and we anticipate moving one of the rigs on a multi-well drilling program in mid-June. The first of the two National 110-UE 1500HP rigs will be ready to commence operations by October 2002 and the second rig by January 2003. These two rigs are similar to the two National 110-UE rigs that we purchased from IDM in the past, except that every engine on these rigs will be equipped with the new energy-efficient Caterpillar 3512 B series engines. We found this type of rig to be very well liked by our customers due to its efficiency and dependability.”

Pioneer Drilling Company provides contract land drilling services to independent and major oil and gas operators drilling wells in central, south and east Texas. The Company’s fleet consists of 22 land drilling rigs that drill in depth ranges between 10,000-18,000 feet, with two additional 1500-hp land rigs to be added by January 2003.

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 anticipated growth, demand from the Company’s customers, capital spending by oil and gas companies and the Company’s expectations regarding its new rigs.
 
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, 2001.