Pioneer Drilling Announces Fiscal 2007 Results
Fourth quarter revenues were up 25% to $103.3 million
May 17, 2007
May 17, 2007 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the three months ended March 31, 2007, which is the fourth quarter of its 2007 fiscal year.
Revenues for the fourth quarter of fiscal 2007 grew to $103.3 million, compared to revenues of $82.8 million for the fourth quarter of fiscal 2006. This 25% increase in revenues was generated by a 13% increase in average revenues per revenue day to $19,863 per day, in addition to a 16% increase in the average number of rigs in Pioneer Drilling’s fleet to 64.3 rigs.
Average drilling margin (1) per revenue day of $8,253 in the fourth quarter of fiscal 2007 was of new, efficient engines, triplex mud pumps and modern mud-cleaning systems. In March, we installed our first two iron roughnecks and anticipate installing roughly 33 more in fiscal 2008.
In April, we installed our first company-owned top drive and will add two more within the next 90 days. As land rig capacity in the U.S. continues to increase, we believe that it is more important than ever to maintain a rig fleet that is modern, efficient, safe and capable of drilling horizontal and directional wells. Also, our customer base is larger and more established today than any other time in our past, with over 70% of our rigs working for large independents or majors.”
Mr. Locke further commented, “Current softness in the U.S. land-rig market will likely bottom out in the summer, and dayrates should firm up towards the end of fiscal 2008. Natural gas prices are far better than most people anticipated and will probably be strong enough later in the fiscal year and next year to generate rig demand sufficient to overcome the steadily increasing supply of land rigs in the U.S. market. Excluding our five low horsepower rigs in Oklahoma, forward dayrates range from $15,500 to $22,000, depending on rig class and horsepower, and excluding top drives and fuel.”
He also stated, “In the Company’s fourth quarter of fiscal 2007, average margins per day and rig utilization declined more than we anticipated. Daywork drilling margins per revenue day declined 14%, to $8,564, as compared to $9,993 in the third quarter. In the fourth quarter, average daywork revenues declined $749 per day while average daywork costs increased $679 per day. The increased daily daywork costs were primarily the result of increased labor and supply, repair and maintenance costs associated with stacking out drilling rigs. Rig utilization declined to 91% in the fourth quarter, as compared to 98% in the third quarter.”
Mr. Locke added, “We expect that our rig utilization will decline very little from this level over the next two or three quarters and begin to increase at the end of fiscal 2008. Also impacting drilling margins per day and earnings was the lack of profitability in our Oklahoma Division. The shallow rig market of western Oklahoma continued to weaken during the fourth quarter as a result of rigs stacking out and footage and dayrates precipitously declining. However, through cost containment and an improving market, the division should begin to show improvement in the current quarter.”
Currently, 30 of the Company’s 66 rigs, or 45%, are operating under term contracts of six months to two years. Four of the term contracts will expire in the current quarter and an additional eight will expire during the second quarter of fiscal 2008. Term contracts cover approximately 4,893 revenue days, or 32%, of the remainder of calendar 2007 and 2,874, or 12%, of calendar 2008.
Revenues for the 12 months of fiscal 2007 increased 46% to $416.2 million, compared to revenues of $284.1 million for fiscal 2006, while net earnings grew 66% during fiscal 2007 to $84.2 million, or $1.68 per diluted share, compared to net earnings of $50.6 million, or $1.06 per diluted share, during fiscal 2006.
Revenue days were 20,930 during the 12 months of fiscal 2007, compared to 18,164 revenue days for fiscal 2006. Pioneer Drilling’s rig utilization rate for both fiscal years was 95%.
Pioneer Drilling’s management team will hold a conference call today, Thursday, May 17, at 11:00 a.m. Eastern time (10:00 a.m. Central), to discuss these results. To participate in the call, dial (303) 262-2139 at least 10 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 May 24, 2007. To access the replay, dial (303) 590-3000 and enter the pass code 11089300#.
Investors, analysts and the general public can listen to the conference call over the Internet by accessing Pioneer Drilling’s Web site at the live call on the Web, please visit Pioneer Drilling’s Web site at least 10 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live Webcast, an archive will be available shortly after the call. For more information, please contact Donna Washburn at DRG http://www.pioneerdrlg.com. To listen to&E at (713) 529-6600 or e-mail dmw@drg-e.com.
Pioneer Drilling provides land contract drilling services to independent and major oil and gas operators drilling wells in Texas, Louisiana, Oklahoma, Kansas and in the Rocky Mountain region. Its fleet consists of 66 land drilling rigs that drill in depth ranges between 6,000 and 18,000 feet.
(1) Drilling margin represents contract drilling revenues less
contract drilling costs. Pioneer Drilling believes that
drilling margin is a useful measure for evaluating its
financial performance, although it is not a measure of
financial performance under generally accepted accounting
principles. However, drilling margin is a common measure of
operating performance used by investors, financial analysts,
rating agencies and Pioneer Drilling's management. A
reconciliation of drilling margin to net earnings is included
in the operating statistics table below in this release.
Drilling margin as presented may not be comparable to other
similarly titled measures reported by other companies.
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 timing and installation of iron roughnecks and topdrives, future natural gas price trends, future dayrates, future demand and market competitiveness of Pioneer Drilling's rig fleet, including our ability to continue to obtain term contracts, the future employment of Pioneer Drilling's rig fleet, overall market demand and utilization rates for rigs. 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. Should one or more of those risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. These risks are discussed in greater detail in Pioneer's filings with the Securities and Exchange Commission (the "SEC"), including the Company's annual report on Form 10-K for the fiscal year ended March 31, 2006 and subsequent filings with the SEC.
The forecasted capital expenditures set forth below contain assumptions management believes are reasonable, based on information available as of the date of this news release. Pioneer Drilling is not undertaking any obligation to update this forecasted information as conditions change or as additional information becomes available. There can be no assurance that any of the forecast estimates can or will be achieved.
- Tables to Follow -
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
(unaudited) Years Ended
March 31, Dec. 31, March 31,
2007 2006 2006 2007 2006
Revenues:
Contract drilling $103,347 $82,840 $112,421 $416,178 $284,148
Costs and Expenses:
Contract drilling 60,406 43,972 58,659 224,423 166,211
Depreciation 14,736 9,519 13,969 52,856 33,387
General and
administrative 2,607 1,953 2,743 11,123 6,793
Bad debt expense
(recovery) - (177) 800 800 (152)
Total operating costs 77,749 55,267 76,171 289,202 206,239
Operating income 25,598 27,573 36,250 126,976 77,909
Other income (expense):
Interest expense - (32) (9) (73) (236)
Interest income 881 720 836 3,828 2,069
Other 8 32 13 57 71
Total other 889 720 840 3,812 1,904
Income before income
taxes 26,487 28,293 37,090 130,788 79,813
Income tax expense (9,269) (10,325) (13,102) (46,609) (29,246)
Net earnings $17,218 $17,968 $23,988 $84,179 $50,567
Earnings per share:
Basic $0.35 $0.37 $0.48 $1.70 $1.08
Diluted $0.34 $0.36 $0.48 $1.68 $1.06
Weighted average number
of shares outstanding:
Basic 49,619 48,337 49,603 49,603 46,808
Diluted 50,127 49,105 50,146 50,132 47,506
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2007 March 31, 2006
Assets
Current assets:
Cash and cash equivalents $84,945 $91,174
Receivables, net 57,698 35,544
Contract drilling in progress 9,837 9,620
Deferred income taxes 2,175 990
Prepaid expenses 3,653 2,208
Total current assets 158,308 139,536
Net property and equipment 342,901 260,784
Other assets 286 358
Total assets $501,495 $400,678
Liabilities and Equity
Current liabilities:
Accounts payable $18,626 $16,041
Federal income taxes payable - 6,835
Prepaid drilling contracts - 140
Accrued expenses 15,593 9,616
Total current liabilities 34,219 32,632
Other non-current liability 346 388
Deferred taxes 38,821 26,982
Total liabilities 73,386 60,002
Total shareholders' equity 428,109 340,676
Total liabilities and shareholders'
equity $501,495 $400,678
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(in thousands)
(unaudited)
Three Months Ended Years Ended
March 31, Dec. 31 March 31,
2007 2006 2006 2007 2006
Revenues by contract:
Daywork contracts $96,915 $79,097 $108,808 $399,188 $252,103
Turnkey contracts 3,445 - - 3,445 10,830
Footage contracts 2,987 3,743 3,613 13,545 21,215
Total $103,347 $82,840 $112,421 $416,178 $284,148
Drilling costs by
contract:
Daywork contracts $54,856 $41,711 $55,726 $211,334 $143,129
Turnkey contracts 2,615 - - 2,615 7,449
Footage contracts 2,935 2,261 2,933 10,474 15,633
Total $60,406 $43,972 $58,659 $224,423 $166,211
Drilling margin by
contract (1) (2):
Daywork contracts $42,059 $37,386 $53,082 $187,854 $108,974
Turnkey contracts 830 - - 830 3,381
Footage contracts 52 1,482 680 3,071 5,582
Total $42,941 $38,868 $53,762 $191,755 $117,937
(1) Reconciliation of
drilling margin to
net earnings:
Drilling margin $42,941 $38,868 $53,762 $191,755 $117,937
Depreciation (14,736) (9,519) (13,969) (52,856) (33,387)
General and
administrative (2,607) (1,953) (2,743) (11,123) (6,793)
Bad debt expense - 177 (800) (800) 152
Other income
(expense) 889 720 840 3,812 1,904
Income tax expense (9,269) (10,325) (13,102) (46,609) (29,246)
Net earnings $17,218 $17,968 $23,988 $84,179 $50,567
(2) Drilling margins represent drilling revenues less contract drilling
costs.
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(unaudited)
Three Months Ended Years Ended
March 31, Dec. 31 March 31,
2007 2006 2006 2007 2006
Average number of rigs 64.3 55.3 62.3 60.8 52.3
Utilization rate 91% 95% 98% 95% 95%
Revenue days by contract:
Daywork contracts 4,911 4,503 5,312 19,995 16,138
Turnkey contracts 81 - - 81 558
Footage contracts 211 198 260 854 1,468
Total 5,203 4,701 5,572 20,930 18,164
Average revenues per day:
Daywork contracts $19,734 $17,565 $20,483 $19,964 $15,622
Turnkey contracts $42,531 $- $- $42,531 $19,409
Footage contracts $14,156 $18,904 $13,896 $15,861 $14,452
All contracts $19,863 $17,622 $20,176 $19,884 $15,643
Average costs per day:
Daywork contracts $11,170 $9,263 $10,491 $10,569 $8,869
Turnkey contracts $32,284 $- $- $32,284 $13,349
Footage contracts $13,910 $11,419 $11,281 $12,265 $10,649
All contracts $11,610 $9,354 $10,527 $10,723 $9,151
Drilling margin per day (3):
Daywork contracts $8,564 $8,302 $9,993 $9,395 $6,753
Turnkey contracts $10,247 $- $- $10,247 $6,059
Footage contracts $246 $7,485 $2,615 $3,596 $3,802
All contracts $8,253 $8,268 $9,649 $9,161 $6,492
(3) Drilling margin per revenue day represents average revenue per revenue
day less average cost per revenue day.
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Capital Expenditures
(in thousands)
Three Months Ended
March 31, Dec. 31,
2007 2006 2006
Capital expenditures:
Routine rig $4,724 $3,895 $6,523
Average per revenue day $908 $833 $1,171
Discretionary:
Rig upgrades $3,183 $5,096 $518
Iron roughnecks and topdrives 3,602 - -
Spare equipment 1,736 387 1,185
Other 3,706 803 3,266
Total discretionary $12,227 $6,286 $4,969
Tubulars $3,589 $308 $46
Total routine, discretionary
and tubulars $20,540 $10,489 $11,538
New-builds and acquisitions 9,487 26,739 19,981
Total capital expenditures $30,027 $37,228 $31,519
Budget
Year
Years Ended Ending
March 31, March 31,
2007 2006 2008
Capital expenditures:
Routine rig $17,832 $12,898 $18,739
Average per revenue day $852 $710
Discretionary:
Rig upgrades $19,917 $21,446 $15,400
Iron roughnecks and topdrives 3,602 - 18,250
Spare equipment 8,457 11,037 3,500
Other 9,022 5,157 5,400
Total discretionary $40,999 $37,640 $42,550
Tubulars $13,942 $6,151 $16,450
Total routine, discretionary
and tubulars $72,773 $56,689 $77,739
New-builds and acquisitions 74,457 72,182 -
Total capital expenditures $147,229 $128,871 $77,739
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Rig Information
Rig Type
Mechanical Electric Total Rigs
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 11 14
Total 41 25 66
Rig 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 16 19
Total 41 25 66
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