Second quarter revenues were up 48% to $152.5 million and earnings per diluted share increased 46% to $0.38 over prior year SAN ANTONIO, Aug. 7
SAN ANTONIO, Aug. 7 /PRNewswire-FirstCall/ -- Pioneer Drilling Company,
Inc. (Amex: PDC) today reported financial results for the three and six months
ended June 30, 2008. As previously announced, the Company has transitioned to
a December 31 fiscal year end; accordingly, the three months ended June 30 is
reported as the second quarter of 2008.
Net income for the second quarter was $19.1 million, or $0.38 per diluted
share, compared with net income of $11.8 million, or $0.24 per diluted share,
for the three months ended March 31, 2008 ("the prior quarter"), and net
income of $13.1 million, or $0.26 per diluted share, for the three months
ended June 30, 2007 ("the year-earlier quarter"). The second quarter of 2008
included three months of operating results from our Production Services
Division, which was formed on March 1, 2008 as a result of the acquisitions of
the production service businesses of the WEDGE Group and Competition Wireline,
as well as contributions from our Colombian operations, which commenced in the
third quarter of 2007.
Revenues for the second quarter were $152.5 million, compared with $113.4
million for the prior quarter and $102.8 million for the year-earlier quarter.
EBITDA(1) for the second quarter increased 47% to $53.4 million from the prior
quarter and 50% from the year-earlier quarter. Additionally, the second
quarter was impacted by a charge to selling, general and administrative
expenses of approximately $1.0 million related to the Company's investigation
of internal control over financial reporting and a charge to interest expense
of approximately $0.2 million related to bank fees and incremental interest
for obtaining a debt covenant waiver.
Net income for the six months ended June 30, 2008 was $31.0 million, or
$0.61 per diluted share, compared with net income of $30.3 million, or $0.60
per diluted share, for the six months ended June 30, 2007. Revenues for the
six months of 2008 were $266.0 million, compared with $206.1 million for the
comparable period in 2007. EBITDA for the six months of 2008 increased 18% to
$89.6 million from the comparable period in 2007 of $76.0 million.
"Our Drilling Services and Production Services divisions both performed
well in the second quarter," said Wm. Stacy Locke, President and CEO. "Our
drilling rig utilization and average margins per day for our Drilling Services
division improved significantly from the prior quarter and our Production
Services margins remained very solid. As a result of the strong demand in
both divisions, we have approved the purchase of additional wireline units,
fishing and rental equipment and in July, we secured a two-year term contract
to build a land rig for the U.S. market. The rig, a 1500 horsepower SCR rig
equipped with an automatic catwalk, iron roughneck and top-drive, is under
construction and expected to be placed in service in December in the Rocky
Mountain region."
The Drilling Services Division contributed $109.3 million of revenues for
the second quarter, an increase of $9.2 million over the prior quarter and
$6.5 million over the year-earlier quarter. Drilling Services revenues
improved due to an increase in rig utilization to 90%, as compared to 84% in
the first quarter, and a 14% increase in the Drilling Services margin(2) to
$8,026 per day, up from $7,047 in the first quarter. Mr. Locke stated, "In
June, dayrates reached their highest level so far this year and we anticipate
continued improvement throughout the remainder of the year. In our
international operations, we moved a fourth drilling rig into Colombia, which
commenced drilling operations this week, and we are marketing another 1500
horsepower SCR rig that could be placed in service prior to year-end if we
secure a drilling contract."
The Production Services Division contributed revenues of $43.3 million in
the second quarter, compared to $13.4 million for the one-month period in the
first quarter of 2008. Mr. Locke further stated, "The Production Services
Division is performing better than expected and generated a margin(2) of 49%
in the second quarter. We remain optimistic about the outlook for workover,
wireline and fishing and rental services for the remainder of the year."
Pioneer Conference Call
Pioneer's management team will hold a conference call today at 2:00 p.m.
Eastern Daylight Time (1:00 p.m. Central Daylight Time), to discuss these
results. 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 it's
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 (61 - 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 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 endedSix 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 86,19362,38870,426 156,619 121,578
Depreciation 20,58016,09817,11937,69930,834
Selling, general and
administrative 12,150 4,724 7,72219,872 8,547
Bad debt expense
(recovery) (92)- 13543 -
Total operating
costs118,83183,21095,402 214,233 160,959
Operating income 33,71619,56917,99551,71145,167
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 16228
Total other(4,990) 881 103(4,887)1,770
Income before taxes28,72620,45018,09846,82446,937
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:
Basic49,78949,63449,75949,77449,627
Diluted 50,48350,21250,29150,36950,167
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
June 30, 2008December 31, 2007
Assets(unaudited) (audited)
Current assets:
Cash and cash equivalents$18,069 $76,703
Receivables, net 78,83847,370
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 25,25121,424
Income tax payable 3,640
Prepaid drilling contracts 1,789 1,933
Accrued expenses 35,29118,693
Total current liabilities 79,78242,050
Long-term debt 271,820 -
Other non-current liabilities5,580 254
Deferred taxes 54,61846,836
Total liabilities 411,80089,140
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 accounts320 -
Loss (gain) on dispositions of
property and equipment (377) 1,434
Stock-based compensation
expense 1,848 1,662
Deferred income taxes2,919 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 653217
Excess tax benefit of stock
option exercises 250 73
Net cash provided by financing
activities276,910290
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 endedSix 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 64,27762,38863,497 127,774 121,578
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 5,18610,78910,590
Average revenues per
day$19,498 $19,079 $19,291 $19,399 $19,464
Average operating
costs per day 11,47211,58112,24411,84311,480
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 - 6,92928,845 -
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 - 6,42727,808 -
Combined margin 66,35440,39142,971 109,32584,548
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 16228
EBITDA 53,36635,68736,20689,57276,029
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 endedDecember
June 30, March 31, June 30, 31,
2008 2007 20082008 2007 2008
Capital expenditures:
Drilling Services
Division:
Routine rigs $3,814 $4,874 $4,007 $7,821 $9,598 $21,200
Discretionary13,7049,516 19,014 32,718 21,74347,600
Tubulars 31,8581,0471,0505,44712,600
New-builds and
acquisitions 1,087 35,658 7461,833 45,14520,000
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 6,008-3,0319,039-39,800
Total Production
Services Division
capital
expenditures6,843-3,1399,982-41,830
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 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
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
SOURCE Pioneer Drilling Company, Inc.
