Pioneer Drilling Reports Fiscal Fourth Quarter and Year-End 2005 Results
Fourth quarter revenues were up 66% to $55.4 million
May 26, 2005
MAY 26, 2005 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the fourth quarter and twelve months ended March 31, 2005.
Revenues for the fourth quarter of fiscal 2005 grew to $55.4 million, compared to revenues of $33.4 million in the fourth quarter of fiscal 2004. This 66% increase in revenues was due to an improvement in rig revenue rates, a 62% increase in the average number of rigs in Pioneer’s fleet and a 6% increase in Pioneer’s rig utilization rate. Net earnings in the fourth quarter of fiscal 2005 were $5.5 million, or $0.14 per diluted share, versus net earnings of $409,000, or $0.02 per share, during the fourth quarter of fiscal 2004.
Revenue days during the fourth quarter of fiscal 2005 increased 69% to 4,207, compared to 2,496 revenue days for the fourth quarter of fiscal 2004. Revenue days by type of contract in the fourth quarter of fiscal 2005 were 3,005 for daywork contracts, 804 for turnkey contracts and 398 for footage contracts. Pioneer’s rig utilization rate increased 6% for the fiscal fourth quarter to 97%, up from 91% in the corresponding period last year.
Wm. Stacy Locke, Pioneer’s President and Chief Executive Officer, stated, “As forecasted, we continued to show improvement in our operating margin for our fiscal fourth quarter; albeit, at a slower rate of increase, as compared to the last quarter. Average dayrates for daywork contracts increased approximately $1,200 per day, or 12%, to approximately $11,450, up from average dayrates of approximately $10,250 for the quarter ended December 31, 2004.
However, our overall improvement in operating margin was negatively impacted by the addition of shallower rigs operating at lower dayrates, footage contracts generating lower average operating margins and the continued reduction in higher-margin turnkey work. Turnkey contracts comprised 19% of our revenue days in our fiscal fourth quarter, down from 29% for the quarter ended December 31, 2004. Conversely, footage contracts increased to 9% of our revenue days, up from 2% for the quarter ended December 31, 2004. This increase in footage revenue days was the result of the five rigs purchased from Allen Drilling in December 2004, which were on footage contracts throughout our fourth quarter and generated operating margins below that of our daywork and turnkey contracts.
“As we progress into fiscal 2006, we anticipate that average dayrates will increase over 10% in each of the next two fiscal quarters and that operating margins from daywork, turnkey and footage contracts will increase as well. Pioneer plans to continue adding quality equipment to seize upon these improving market conditions. As previously announced, we are building two 14,000 foot capacity, 1000 hp, SCR rigs to add to our Vernal, Utah operations. The first of these rigs is scheduled to begin work in less than 30 days and the second in early August 2005. Both rigs will operate under separate two-year contracts with a large, independent oil and gas company. In addition, we are planning to complete a 1500 hp SCR rig by September 2005 and are evaluating the addition of up to four more 1000 hp and 1200 hp rigs by the end of fiscal 2006. The decision to build the additional five rigs is subject to obtaining satisfactory contracts with minimum terms of one year. We anticipate these rigs will range in cost from $6.8 million to $7.4 million each.”
Revenues for the fiscal year ended March 31, 2005 were $185.2 million, compared to revenues of $107.9 million for fiscal 2004. Net earnings during fiscal 2005 were $10.8 million, or $0.30 per diluted share, compared to a net loss of $1.8 million, or $0.08 loss per share, during fiscal 2004.
Revenue days were 13,894 days during fiscal 2005, compared to 8,764 days for fiscal 2004. Pioneer’s rig utilization rate for fiscal 2005 was 96%, up from 88% for fiscal 2004.
Pioneer’s management team will be holding a conference call on Thursday, May 26, 2005, at 11:00 a.m., Eastern time (10:00 a.m., Central) to discuss these results. To participate in the call, dial (303) 262-2138 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 June 2, 2005. To access the replay, dial (303) 590- 3000 and enter the pass code 11030919#.
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&E at (713) 529-6600 or e-mail
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, Western Oklahoma and in the Rocky Mountain region. Pioneer’s fleet consists of 50 land drilling rigs that drill in depth ranges between 6,000 and18,000 feet and will increase to 52 rigs by August 2005.
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 operating margins, the gradual decline in turnkey contract revenue days as dayrates improve, our plans to add more drilling rigs to our fleet, the anticipated cost of those rigs and our success in obtaining satisfactory contracts in order to add additional 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, 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 (“the SEC”), including the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2004 and subsequent filings with the SEC.
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Year Ended
3/31/05 3/31/04 12/31/04 3/31/05 3/31/04
Contract drilling revenues $55,357 $33,367 $46,388 $185,247 $107,876
Costs and Expenses:
Contract drilling 37,681 26,747 32,357 138,483 88,504
Depreciation 6,967 4,490 5,770 23,091 16,161
General and
administrative 1,746 746 1,215 4,657 2,773
Bad debt expense (100) - 342 242 -
Total operating costs 46,294 31,983 39,684 166,473 107,438
Operating income (loss) 9,063 1,384 6,704 18,774 438
Other income (expense):
Interest expense (447) (691) (159) (1,722) (2,808)
Loss on early
extinguishment -
of debt - - - (101) -
Interest income 55 15 55 173 102
Other 15 (13) 7 37 52
Total other (377) (689) (97) (1,613) (2,654)
Income (loss) before taxes 8,686 695 6,607 17,161 (2,216)
Income tax benefit
(expense) (3,193) (286) (2,428) (6,349) 426
Net earnings (loss) $5,493 $409 $4,179 $10,812 $(1,790)
Loss per share:
Basic $0.14 $0.02 $0.11 $0.31 $(0.08)
Diluted $0.14 $0.02 $0.11 $0.30 $(0.08)
Weighted average number
of shares outstanding:
Basic 39,142 24,404 38,428 34,544 22,586
Diluted 40,029 32,189 39,535 37,578 22,586
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(in thousands, except averages per day)
(Unaudited)
Three Months Ended Year Ended
3/31/05 3/31/04 12/31/04 3/31/05 3/31/04
Average number of rigs 49.0 30.3 39.7 40.1 27.3
Utilization rate 97% 91% 98% 96% 88%
Revenue days by
contract:
Daywork contracts 3,005 1,554 2,421 8,685 5,626
Turnkey contracts 804 914 1,024 4,471 2,827
Footage contracts 398 28 79 738 311
Total 4,207 2,496 3,524 13,894 8,764
Revenues by contract:
Daywork contracts $36,720 $14,018 $26,824 $95,997 $50,145
Turnkey contracts 13,976 19,024 18,544 80,211 54,235
Footage contracts 4,661 325 1,020 9,038 3,496
Total $55,357 $33,367 $46,388 $185,246 $107,876
Drilling costs by
contract:
Daywork contracts $24,015 $12,209 $18,146 $68,416 $42,904
Turnkey contracts 10,268 14,253 13,582 63,421 42,761
Footage contracts 3,398 285 628 6,646 2,839
Total $37,681 $26,747 $32,356 $138,483 $88,504
Average revenues per
day:
Daywork contracts $12,220 $9,021 $11,080 $11,053 $8,913
Turnkey contracts 17,383 20,814 18,109 17,940 19,185
Footage contracts 11,711 11,607 12,911 12,247 11,241
Total $13,158 $13,368 $13,163 $13,333 $12,309
Average costs per day:
Daywork contracts $7,992 $7,856 $7,495 $7,877 $7,626
Turnkey contracts 12,771 15,594 13,264 14,185 15,126
Footage contracts 8,538 10,179 7,949 9,005 9,129
Total $8,957 $10,716 $9,182 $9,967 $10,099
Capital expenditures:
Rig additions $10,072 $15,791 $39,027 $53,341 $34,961
Other 7,977 3,995 5,972 27,047 9,884
$18,049 $19,786 $44,999 $80,388 $44,845
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
3/31/2005 3/31/2004
Assets
Current assets:
Cash and cash equivalents $69,673 $1,816
Marketable securities 1,000 4,550
Receivables, net 26,108 10,902
Contract drilling in progress 5,365 9,131
Current deferred income taxes 570 285
Prepaid expenses 1,877 1,336
Total current assets 104,593 28,020
Net property and equipment 170,566 115,342
Other assets 850 369
Total assets $276,009 $143,731
Liabilities and Equity
Current liabilities:
Notes payable $682 $558
Current long-term debt 4,733 3,865
Accounts payable 15,622 13,271
Federal income taxes payable 196 -
Prepaid drilling contracts 173
Accrued expenses 6,860 4,298
Total current liabilities 28,266 21,992
Long-term debt 13,445 44,892
Other non-current liability 400 -
Deferred taxes 12,283 6,011
Total liabilities 54,394 72,895
Total shareholders' equity 221,615 70,836
$276,009 $143,731
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