Second quarter results and conference call are scheduled for Thursday, August 7 at 2:00 p.m. Eastern Time SAN ANTONIO, Texas, Aug. 5
SAN ANTONIO, Texas, Aug. 5 /PRNewswire-FirstCall/ -- Pioneer Drilling
Company, Inc. (Amex: PDC) today announced that it has filed its Form 10-Q for
the quarter ended March 31, 2008 with the Securities and Exchange Commission.
As previously reported, the Company's Board of Directors formed a special
subcommittee to investigate certain questions raised with respect to the
effectiveness of the Company's internal control over financial reporting. The
special subcommittee engaged independent legal counsel and forensic
accountants to assist in the investigation.
During the course of the investigation, no information was discovered that
evidences a material weakness in the Company's internal control over financial
reporting or requires a restatement of the Company's historical financial
statements. Upon filing timely the 2008 second quarter Form 10-Q with the
Securities and Exchange Commission, the Company expects to meet the extended
filing deadline established by the American Stock Exchange ("AMEX") for
continued listing of the Company's common stock and regain compliance with
Sections 134 and 1101 of the AMEX Company Guide. The Company will notify the
AMEX Listing Qualification Department of this development.
The Company has also delivered its financial statements for the quarter
ended March 31, 2008 to its lenders, together with a compliance certificate,
as required under the Company's senior revolving credit facility led by Wells
Fargo Bank, N.A. and Fortis Merchant Banking.
Commenting on the results of the investigation, Pioneer's President and
CEO, Wm. Stacy Locke said, "We are thankful that this internal investigation
is complete and we can now turn our full attention to operating our business
and ensuring that Pioneer continues to be a leader in our industry."
First Quarter 2008 Financial Results
Net income for the first quarter of 2008 was $11.8 million, or $0.24 per
diluted share, compared with net income of $14.8 million, or $0.29 per diluted
share, for the three months ended December 31, 2007 ("the prior quarter"), and
net income of $17.2 million, or $0.34 per diluted share, for the three months
ended March 31, 2007 ("the year-earlier quarter"). The first quarter was
impacted by a $0.01 per diluted share favorable tax benefit compared with a
$0.04 per diluted share favorable tax benefit.
The first quarter of 2008 included the 31 days' contribution from the new
Production Services Division, whose businesses were acquired from the WEDGE
Group and Competition Wireline on March 1, 2008, plus the contribution from
the our Colombian operations, which commenced in the third quarter of 2007.
Revenues for the first quarter were $113.4 million, compared with $104.6
million for the prior quarter and $103.3 million for the year-earlier quarter.
The Drilling Services Division contributed $100.0 million of revenues, and the
Production Services Division contributed $13.4 million of revenue for the
one-month period in the first quarter of 2008. EBITDA(1) for the first
quarter increased $1.1 million from the prior quarter to $36.2 million but
declined $4.1 million from the year-earlier quarter. Cash flows from
operations for the three months ended March 31 totaled $40.0 million, an
increase of $3.4 million versus the prior quarter and $3.5 million compared
with the year-earlier quarter.
Selling, general and administrative expenses increased $1.9 million from
the prior quarter and $3.9 million versus the year-earlier quarter, primarily
due to additional compensation-related costs associated with the addition of
WEDGE personnel, expanding the Company's land drilling operations into
Colombia and enhancing the corporate staff to manage the our transition into a
multinational, oilfield services company. Interest expense paid on the new
senior secured revolving credit facility used to fund the WEDGE acquisition
totaled $1.6 million for the first quarter. Other income for the first quarter
was favorably impacted by a $1.1 million foreign currency translation gain
related to our operations in Colombia.
"The first quarter of 2008 marked significant progress towards Pioneer's
long-term strategic transformation from a domestic land driller into a
multi-service, international oilfield services company, with the closing of
the WEDGE acquisition and our continued expansion into Colombia," said Locke.
"The WEDGE acquisition has been accretive to earnings from the outset. While
we experienced lower drilling margins and utilization during the first quarter
as a result of surplus rig capacity in the U.S. land market, we believe the
first quarter marks the bottom of the current industry cycle. And the reduced
drilling margins we experienced were partially offset by a strong margin
contribution from Production Services. We also continue to be very pleased
with the growth in our new Colombian operations and expect it to continue to
be a strong contributor to revenues and profitability going forward," Locke
said.
Pioneer Conference Call
Pioneer's management team will hold a conference call Thursday, August 7,
at 2:00 p.m. Eastern Time (1:00 p.m. Central Time), to discuss these results
and the second quarter 2008 results, which will be released that morning at
6:00 a.m. Eastern Time. To participate in the call, dial (303) 205-0066 at
least 10 minutes early and ask for the Pioneer Drilling conference call. A
replay will be available approximately two hours after the call ends and will
be accessible until August 14. To access the replay, dial (303) 590-3000 and
enter the pass code 11118059#.
The conference call will also be available on the Internet at Pioneer's
Web site at http://www.pioneerdrlg.com. To listen to the live call, visit
Pioneer's Web site at least 10 minutes early to register and download any
necessary audio software. An archive will be available shortly after the
call. For more information, please contact Donna Washburn at DRG&E at
(713) 529-6600 or e-mail dmw@drg-e.com.
About Pioneer
Pioneer Drilling Company provides land contract drilling services to
independent and major oil and gas operators in Texas, Louisiana, Oklahoma,
Kansas, the Rocky Mountain region and internationally in Colombia though its
Pioneer Drilling Services Division. The Company also provides workover rig,
wireline and fishing and rental services to producers in the U.S. Gulf Coast,
Mid-Continent and Rocky Mountain regions through its Pioneer Production
Services Division. Its fleet consists of 69 land drilling rigs that drill at
depths of 6,000 and 18,000 feet, 66 workover rigs (sixty one 550-horsepower
rigs, four 600-horsepower rigs and one 400-horsepower rig), 51 wireline units,
and fishing and rental tools.
Cautionary Statement Regarding Forward-Looking Statements, non-GAAP
Financial Measures and Reconciliations
Statements we make in this news release that express a belief, expectation
or intention, as well as those that are not historical fact, are
forward-looking statements that are subject to risks, uncertainties and
assumptions. Our actual results, performance or achievements, or industry
results, could differ materially from those we express in this news release as
a result of a variety of factors, including general economic and business
conditions and industry trends, the continued strength or weakness of the
contract land drilling industry in the geographic areas in which we operate,
decisions about onshore exploration and development projects to be made by oil
and gas companies, the highly competitive nature of our business, difficulty
in integrating the services of acquired companies, including the production
services businesses of WEDGE and Competition, in an efficient and effective
manner, the availability, terms and deployment of capital, the availability of
qualified personnel, changes in, or our failure or inability to comply with,
government regulations, including those relating to the environment, the
economic and business conditions of our international operations, challenges
in achieving strategic objectives, and the risk that our markets do not evolve
as anticipated. We have discussed these factors in more detail in our
transition report on Form 10-KT for the fiscal year ended December 31, 2007
and our quarterly report on Form 10-Q for the quarter ended March 31, 2008.
These factors are not necessarily all the important factors that could affect
us. Unpredictable or unknown factors we have not discussed in this news
release, in our annual report on Form 10-K or in our quarterly reports on Form
10-Q could also have material adverse effects on actual results of matters
that are the subject of our forward-looking statements. All forward-looking
statements speak only as the date on which they are made and we undertake no
duty to update or revise any forward-looking statements. We advise our
shareholders that they should (1) be aware that important factors not referred
to above could affect the accuracy of our forward-looking statements and (2)
use caution and common sense when considering our forward-looking statements.
This news release contains non-GAAP financial measures as defined by SEC
Regulation G. A reconciliation of each such measure to its most directly
comparable GAAP financial measure, together with an explanation of why
management believes that these non-GAAP financial measures provide useful
information to investors, is provided below.
(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 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.
Contacts: Joyce M. Schuldt, Executive VP & CFO
Pioneer Drilling Company
210-828-7689
Lisa Elliott / lelliott@drg-e.com
Anne Pearson / apearson@drg-e.com
DRG&E / 713-529-6600
- Financial Statements Follow -
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, December 31,
2008 2007 2007
Revenues $113,397 $103,347 $104,589
Costs and Expenses:
Operating Costs70,42659,189 63,736
Depreciation 17,11914,736 16,661
Selling, general and
administrative 7,722 3,8245,822
Bad debt expense (recovery) 135 - (15)
Total operating costs95,40277,749 86,204
Operating income 17,99525,598 18,385
Other income (expense):
Interest expense (1,574)- (1)
Interest income 585 881 808
Other 1,092 8 97
Total other 103 889 904
Income before taxes 18,09826,487 19,289
Income tax expense (6,250) (9,269) (4,512)
Net earnings$11,848 $17,218 $14,777
Earnings per share:
Basic $0.24 $0.35$0.30
Diluted $0.24 $0.34$0.29
Weighted average
number of shares outstanding:
Basic 49,75949,619 49,651
Diluted50,29150,127 50,188
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
20082007
Assets (unaudited) (audited)
Current assets:
Cash and cash equivalents $15,618 $76,703
Receivables, net 68,491 47,370
Contract drilling in progress 16,603 7,861
Deferred income taxes 5,334 3,670
Inventory 2,813 1,180
Prepaid expenses and other 6,022 5,073
Total current assets 114,881 141,857
Net property and equipment 570,312 417,022
Deferred income taxes708 573
Goodwill 172,228 -
Other long-term assets43,140 760
Total assets$901,269$560,212
Liabilities and Equity
Current liabilities:
Current maturities of long-term debt $23,457 $-
Accounts payable 24,888 21,424
Income taxes payable4,371 -
Prepaid drilling contracts 3,082 1,933
Accrued expenses 32,140 18,693
Total current liabilities 87,938 42,050
Long-term debt 271,563 -
Other non-current liabilities 5,087 254
Deferred taxes51,430 46,836
Total liabilities 416,018 89,140
Total shareholders' equity 485,251 471,072
Total liabilities and
shareholders' equity $901,269$560,212
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31, December 31,
20082007 2007
Cash flows from operating activities:
Net earnings$11,848 $17,218$14,777
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and amortization 17,119 14,736 16,661
Allowance for doubtful accounts 135 -(15)
Loss (gain) on dispositions of
property and equipment (23)576884
Stock-based compensation expense 951 587 1,031
Deferred income taxes554 6,179 1,672
Change in other assets74 5 (519)
Change in non-current liabilities(88)(85) (103)
Changes in current assets and
liabilities 9,415 (2,761) 2,239
Net cash provided by operating
activities39,985 36,455 36,627
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 (32,938)(27,870) (27,033)
Purchase of auction rate
securities, net (16,475) - -
Proceeds from sale of property and
equipment 933 1,477806
Net cash used in investing activities(388,191)(26,393) (26,227)
Cash flows from financing activities:
Payments of debt (22,001) - -
Proceeds from issuance of debt 311,500 - -
Debt issuance costs (3,281) - -
Proceeds from sale of common stock 653 110 -
Excess tax benefit of stock option
exercises 250 19 -
Net cash provided by financing
activities 287,121 129 -
Net increase (decrease) in cash and
cash equivalents (61,085) 10,191 10,400
Beginning cash and cash equivalents76,703 74,754 66,303
Ending cash and cash equivalents $15,618 $84,945$76,703
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(in thousands)
(unaudited)
Three Months Ended
March 31, March 31, December 31,
200820072007
Drilling Services Division:
Revenues$100,041$103,347$104,589
Operating costs 63,497 59,189 63,736
Drilling services margin (1) $36,544 $44,158 $40,853
Average number of drilling rigs 67.064.367.0
Utilization rate 84% 90% 86%
Revenue days 5,186 5,203 5,343
Average revenues per day $19,291 $19,863 $19,575
Average operating costs per day 12,244 11,376 11,929
Drilling services margin per
day (2) $7,047 $8,487 $7,646
Production Services Division:
Revenues $13,356 $- $-
Operating costs6,929 - -
Production services margin (1) $6,427 $- $-
EBITDA (3) $36,206 $40,342 $35,143
Reconciliation of combined Drilling
services margin and Production
services margin and EBITDA to net
earnings:
Drilling services margin $36,544 $44,158 $40,853
Production services margin 6,427 - -
Combined margin 42,971 44,158 40,853
General and administrative(7,722) (3,824) (5,822)
Bad debt expense(135) - 15
Other income (expense) recovery1,092 8 97
EBITDA 36,206 40,342 35,143
Depreciation (17,119)(14,736)(16,661)
Interest income (expense), net (989)881 807
Income tax expense(6,250) (9,269) (4,512)
Net earnings $11,848 $17,218 $14,777
(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
Three Months EndedEnding
March 31, March 31, December 31, December 31,
2008 20072007 2008
Capital expenditures:
Drilling Services Division:
Routine rigs $4,007 $4,724 $5,570 $21,200
Discretionary 19,014 12,227 14,35047,600
Tubulars1,0473,589 2,74012,600
New-builds and
acquisitions 7469,487 3,01220,000
Total Drilling Services
Division capital
expenditures24,814 30,027 25,672 101,400
Average routine rig capital
expenditures per revenue
day (1) $773 $908 $1,077 $998
Production Services Division:
Routine 108- - 2,030
New-builds and acquisitions 3,031- -39,800
Total Production Services
Division capital
expenditures 3,139- -41,830
Total capital
expenditures $27,953 $30,027 $25,672 $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 HP3 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 HP61
600 HP 4
Total 66
Wireline units51
Fishing & Rental Tools Inventory $14 Million
SOURCE Pioneer Drilling Company, Inc.
