SAN ANTONIO, May 7 /PRNewswire-FirstCall/ -- Pioneer Drilling
Company, Inc. (NYSE Amex: PDC) today reported financial and
operating results for the three months ended March 31, 2009.
Financial Results Net income for the first quarter was $618,000, or
$0.01 per diluted share, compared with adjusted net income of $18.7
million, or $0.37 per diluted share for the three months ended
December 31, 2008 ("the prior quarter") adjusted to exclude the
impact of impairment charges(1). At December 31, 2008, we
recognized a $118.6 million goodwill impairment charge and a $52.8
million intangible asset impairment charge associated with the
acquisitions that make up our Production Services Division. Net
income for the three months ended March 31, 2008 ("the year-earlier
quarter") was $11.8 million, or $0.24 per diluted share. The first
quarter of 2008 included only one month of operating results from
our Production Services Division, which was formed on March 1,
2008. Revenues for the first quarter were $100.8 million, compared
with $170.7 million for the prior quarter and $113.4 million for
the year-earlier quarter. EBITDA(2) for the first quarter was $27.8
million, compared to $60.4 million for the prior quarter and $36.2
million for the year-earlier quarter. Operating Results "During the
first quarter, the utilization rate for our drilling rigs averaged
52%, down from 87% in the fourth quarter of 2008, with a
significant portion of those rigs operating under longer-term
drilling contracts that were established when rig demand and day
rates were at higher levels," said Wm. Stacy Locke, President and
CEO of Pioneer Drilling. "As those contracts have progressively
expired and demand has continued to be negatively impacted by the
dramatic decline in commodity prices, the number of idle rigs has
increased. "Currently, out of 70 rigs in the U.S. and Colombia, we
have 27 rigs operating, 7 of which are idle but earning revenue
under the remaining terms of their contracts," added Mr. Locke. "We
will soon add to our fleet a newly built, 1500 horsepower AC
electric drilling rig. We are very excited about this advanced,
next-generation rig that will begin operating in May 2009 in North
Dakota under a three-year contract. In Colombia, we are maintaining
relatively high utilization with four of our five international
drilling rigs generating revenues." Revenues for the Drilling
Services Division were $71.4 million for the first quarter, a 42%
decline from the prior quarter. The Drilling Services margin(3)
declined 47% to $27.2 million. With the lower utilization rate in
the first quarter, the number of revenue days dropped 2,230, or
40%, and the Drilling Services margin(3) per day decreased $1,070,
or 11%, to $8,257 in the first quarter. Revenues for the Production
Services Division declined 38% to $29.5 million for the first
quarter, compared to $47.4 million in the prior quarter. Production
Services margin(3) decreased 49% to $10.8 million, compared to
$21.2 million in the prior quarter. Margin as a percentage of
revenue also decreased to 36% as compared to 45% in the prior
quarter. Currently, 58 of Pioneer's 74 workover rigs have crews
assigned and are operating or being actively marketed, while the
remaining 16 workover rigs are idle with no crews assigned. "It
seems clear that the current downturn is the worst this industry
has faced in decades, and while we do not know when conditions will
improve, we have begun to see signs that utilization rate declines
are slowing and that we may be approaching a bottom. Accordingly,
in this challenging environment, we are continuing to reduce costs,
although certain costs are fixed and can't be reduced at the same
pace as revenue," Locke said. "Selling, general and administrative
expense declined 17% to $10.0 million for the first quarter,
compared to $12.1 million for the prior quarter as a result of cost
cutting measures. Additionally, we are monitoring our capital
expenditures closely and focusing on routine expenditures necessary
to keep our equipment in safe and efficient working order and
limiting our discretionary expenditures for new equipment and
upgrades. "Our working capital was $67.3 million at March 31, up
from $64.4 million at December 31, and our cash and cash
equivalents were $30.0 million at the end of the first quarter, up
$3.2 million from the prior quarter. The increase in cash and cash
equivalents was due to cash provided by operations of $43.9
million, offset by $24.8 million of property and equipment
expenditures and $16.1 million of debt payments. We have $132.1
million of borrowing availability on our senior secured revolving
credit facility, with $257.5 million due at maturity in February
2013," he said. Conference Call Pioneer's management team will hold
a conference call today at 11:00 a.m. Eastern Time (10:00 a.m.
Central Time), to discuss these results. To participate in the
call, dial 303-205-0033 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 May 14. To access the replay, dial (303) 590-3000 and enter
the pass code 11130309#. The conference call will also be available
on the Internet at Pioneer's Web site at . 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
Pioneer Drilling Company provides contract land drilling services
to independent and major oil and gas operators in Texas, Louisiana,
Oklahoma, Kansas, the Rocky Mountain region and internationally in
Colombia through 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 71 land drilling rigs that drill at
depths of 6,000 and 18,000 feet, 74 workover rigs (sixty-nine 550
horsepower rigs, four 600 horsepower rigs and one 400 horsepower
rig), 61 wireline units, and fishing and rental tools. 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, risks
associated with the current global economic crisis and its impact
on capital markets and liquidity, the continued strength or
weakness of the oil and gas production industry in the geographic
areas in which we operate including the price of oil and natural
gas in general, and the recent precipitous decline in prices in
particular, and the impact of commodity prices and other factors
upon future decisions about onshore exploration and development
projects to be made by oil and gas companies and their ability to
obtain necessary financing, the highly competitive nature of our
business, difficulty in integrating the services of acquired
companies, including the production services businesses of WEDGE,
Competition, Paltec and Pettus 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 many of these factors in more detail
in our annual report on Form 10-K for the year ended December 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, or in our annual report on Form
10-K 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 in the following tables. (1) Net income
adjusted to exclude the impact of impairment charges represents net
loss as reported less the goodwill impairment charge, intangible
asset impairment charge and the tax benefit recognized from the
impairments. We believe that net income adjusted to exclude the
impact of impairment charges is a useful measure for evaluating
financial performance, although it is not a measure of financial
performance under GAAP. A reconciliation of net income adjusted to
exclude the impact of impairment charges to net loss as reported is
included in the tables to this news release. Net income adjusted to
exclude the impact of impairment charges as presented may not be
comparable to other similarly titled measures reported by other
companies. (2) We define EBITDA as earnings (loss) before interest
income (expense), taxes, depreciation, amortization and
impairments. 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 (loss) earnings to EBITDA is included in the tables to 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. (3)
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 GAAP. 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 (loss) earnings is
included in the tables to this press release. Drilling Services
margin and Production Services margin as presented may not be
comparable to other similarly titled measures reported by other
companies. Contacts: Lorne E. Phillips, CFO Pioneer Drilling
Company 210-828-7689 Lisa Elliott / Anne Pearson / DRG&E /
713-529-6600 - Financial Statements and Information 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, 2009 2008
2008 ---- ---- ---- Revenues: Drilling services $71,366 $100,041
$123,303 Production services 29,474 13,356 47,392 ------ ------
------ Total revenue $100,840 $113,397 $170,695 -------- --------
-------- Costs and expenses: Drilling services 44,128 63,497 71,731
Production services 18,716 6,929 26,226 Depreciation and
amortization 25,446 17,119 26,221 Selling, general and
administrative 10,027 7,722 12,123 Bad debt (recovery) expense
(334) 135 639 Impairment of goodwill - - 118,646 Impairment of
intangible assets - - 52,847 ------- ------- ------- Total
operating costs and expenses 97,983 95,402 308,433 ------ ------
------- Income (loss) from operations 2,857 17,995 (137,738) -----
------ -------- Other (expense) income: Interest expense (1,988)
(1,574) (3,460) Interest income 84 585 261 Other (515) 1,092 471
---- ----- --- Total other (expense) income (2,419) 103 (2,728)
------ --- ------ Income (loss) before income taxes 438 18,098
(140,466) Income tax benefit (expense) 180 (6,250) 22,562 ---
------ ------ Net earnings (loss) $618 $11,848 $(117,904) ====
======= ========= (Loss) earnings per common share: Basic $0.01
$0.24 $(2.37) ===== ===== ====== Diluted $0.01 $0.24 $(2.37) =====
===== ====== Weighted average number of shares outstanding: Basic
49,824 49,759 49,818 Diluted 49,929 50,291 49,818 PIONEER DRILLING
COMPANY AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in
thousands) March 31, 2009 December 31, 2008 --------------
----------------- ASSETS (unaudited) (audited) ------ Current
assets: Cash and cash equivalents $30,014 $26,821 Receivables, net
62,099 87,161 Unbilled receivables 11,302 12,262 Deferred income
taxes 5,417 6,270 Inventory 4,672 3,874 Prepaid expenses and other
current assets 5,233 8,902 ----- ----- Total current assets 118,737
145,290 Net property and equipment 630,424 627,562 Intangible
assets, net of amortization 28,736 29,913 Other long-term assets
17,990 21,714 ------ ------ Total assets $795,887 $824,479 ========
======== LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ Current liabilities: Accounts
payable $16,557 $21,830 Current portion of long- term debt 2,156
17,298 Prepaid drilling contracts - 1,171 Accrued expenses 32,772
40,619 ------ ------ Total current liabilities 51,485 80,918
Long-term debt, less current portion 261,152 262,115 Other
long-term liabilities 6,310 6,413 Deferred taxes 62,291 60,915
------ ------ Total liabilities 381,238 410,361 Total shareholders'
equity 414,649 414,118 ------- ------- Total liabilities and
shareholders' equity $795,887 $824,479 ======== ======== PIONEER
DRILLING COMPANY AND SUBSIDIARIES Condensed Consolidated Statements
of Cash Flows (in thousands) (unaudited) Three months ended March
31, December 31, 2009 2008 2008 ---- ---- ---- Cash flows from
operating activities: Net earnings (loss) $618 $11,848 $(117,904)
Adjustments to reconcile net earnings (loss) to net cash - provided
by operating activities: - Depreciation and amortization 25,446
17,119 26,221 Allowance for doubtful accounts 66 135 1,322 Loss
(gain) on dispositions of property and equipment 149 (23) (293)
Stock-based compensation expense 1,769 951 1,673 Impairment of
goodwill and intangible assets - - 171,493 Deferred income taxes
3,336 554 (13,010) Change in other assets 761 74 (90) Change in
non- current liabilities (815) (88) (292) Changes in current assets
and liabilities 12,593 9,415 (8,485) ------ ----- ------ Net cash
provided by operating activities 43,923 39,985 60,635 ------ ------
------ Cash flows from investing activities: Acquisition of WEDGE,
net of cash acquired - (313,610) (15) Acquisition of Competition
Wireline, net of cash acquired - (26,101) (2) Acquisition of other
production services businesses (2,781) Purchases of property and
equipment (24,830) (32,938) (47,660) Purchase of auction rate
securities, net - (16,475) 575 Proceeds from sale of property and
equipment 169 933 1,296 Proceeds from insurance recoveries 36 - 788
---- ---- --- Net cash used in investing activities (24,625)
(388,191) (47,799) ------- -------- ------- Cash flows from
financing activities: Payments of debt (16,105) (22,001) (43,363)
Proceeds from issuance of debt - 311,500 39,900 Debt issuance costs
- (3,281) - Proceeds from exercise of options - 653 112 Excess tax
benefit of stock option exercises - 250 (6) ---- ---- ---- Net cash
(used in) provided by financing activities (16,105) 287,121 (3,357)
------- ------- ------ Net increase (decrease) in cash and cash
equivalents 3,193 (61,085) 9,479 Beginning cash and cash
equivalents 26,821 76,703 17,342 ------ ------ ------ Ending cash
and cash equivalents $30,014 $15,618 $26,821 ======= =======
======= PIONEER DRILLING COMPANY AND SUBSIDIARIES Operating
Statistics (in thousands, except number of rigs, utilization rate
and per day information) (unaudited) Three months ended March 31,
December 31, 2009 2008 2008 ---- ---- ---- Drilling Services
Division: Revenues $71,366 $100,041 $123,303 Operating costs 44,128
63,497 71,731 ------ ------ ------ Drilling services margin (1)
$27,238 $36,544 $51,572 ======= ======= ======= Average number of
drilling rigs 70.0 67.0 68.7 Utilization rate 52% 84% 87% Revenue
days 3,299 5,036 5,529 Average revenues per day $21,633 $19,865
$22,301 Average operating costs per day 13,376 12,609 12,974 ------
------ ------ Drilling services margin per day (2) $8,257 $7,256
$9,327 ====== ====== ====== Production Services Division: Revenues
$29,474 $13,356 $47,392 Operating costs 18,716 6,929 26,226 ------
----- ------ Production services margin(1) $10,758 $6,427 $21,166
======= ====== ======= Combined: Revenues $100,840 $113,397
$170,695 Operating Costs 62,844 70,426 97,957 ------ ------ ------
Combined margin $37,996 $42,971 $72,738 ======= ======= =======
EBITDA (3) $27,788 $36,206 $60,447 ======= ======= ======= (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 (loss) earnings is included in the table below.
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 (loss) before interest income
(expense), taxes, depreciation, amortization and impairments.
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 (loss)
earnings as an indication of operating performance or cash flows
from operating activities or as a measure of liquidity. A
reconciliation of net (loss) earnings to EBITDA is included in the
table below. 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 Reconciliation of Combined
Drilling Services Margin and Production Services Margin and EBITDA
to Net (Loss) Earnings (in thousands) Three months ended March 31,
December 31, 2009 2008 2008 ---- ---- ---- Combined margin $37,996
$42,971 $72,738 Selling, general and administrative (10,027)
(7,722) (12,123) Bad debt recovery (expense) 334 (135) (639) Other
(expense) income (515) 1,092 471 ---- ----- --- EBITDA 27,788
36,206 60,447 Depreciation and amortization (25,446) (17,119)
(26,221) Impairment of goodwill - - (118,646) Impairment of
intangible assets - - (52,847) Interest expense, net (1,904) (989)
(3,199) Income tax benefit (expense) 180 (6,250) 22,562 --- ------
------ Net earnings (loss) $618 $11,848 $(117,904) ==== =======
========= PIONEER DRILLING COMPANY AND SUBSIDIARIES Reconciliation
of Net Loss as Reported to Net Earnings Adjusted to Exclude
Impairment Charge Impact and Diluted EPS Adjusted to Exclude
Impairment Charge Impact (in thousands, except per share data)
Three months ended December 31, 2008 ------------- Net loss as
reported $(117,904) Impairment of goodwill 118,646 Impairment of
intangible assets 52,847 Tax benefit recognized from impairment
(34,886) ------- Net earnings adjusted to exclude impairment charge
impact $18,703 ======= Basic weighted average number of shares
outstanding, as reported 49,818 Effect of dilutive securities 255
--- Diluted weighted average number of shares outstanding adjusted
for impairment charge impact 50,073 ====== Diluted EPS adjusted to
exclude impairment charge impact $0.37 ===== Diluted EPS as
reported (4) $(2.37) ====== (4) Net income adjusted to exclude the
impact of impairment charges represents net loss as reported less
the goodwill impairment charge, intangible asset impairment charge
and the tax benefit recognized from the impairments. We believe
that net income adjusted to exclude the impact of impairment
charges is a useful measure for evaluating financial performance,
although it is not a measure of financial performance under GAAP. A
reconciliation of net income adjusted to exclude the impact of
impairment charges to net loss as reported is included in the table
above. Net income adjusted to exclude the impact of impairment
charges as presented may not be comparable to other similarly
titled measures reported by other companies. (5) The effect of
dilutive securities is not reflected in diluted EPS as reported
because the effect of their inclusion would be antidilutive, or
would decrease the reported loss per share. Therefore, basic EPS as
reported is the same as diluted EPS as reported. PIONEER DRILLING
COMPANY AND SUBSIDIARIES Capital Expenditures (in thousands) Budget
------ Three months ended Year Ending March 31, December December
31, 2009 2008 2008 2009 ---- ---- ---- ---- Capital expenditures:
Drilling Services Division: Routine rigs $3,896 $4,007 $5,209
$13,100 Discretionary 6,063 19,014 13,105 32,100 Tubulars 868 1,047
44 5,000 New-builds and acquisitions - 746 16,916 - ---- ----
------ ---- Total Drilling Services Division capital expenditures
10,827 24,814 35,274 50,200 ------ ------ ------ ------ Production
Services Division: Routine 1,713 108 1,337 5,800 Discretionary 81 -
146 2,200 New-builds and acquisitions 4,479 3,031 10,563 7,000
----- ----- ------ ----- Total Production Services Division capital
expenditures 6,273 3,139 12,046 15,000 ----- ----- ------ ------
Actual and budgeted capital expenditures 17,100 27,953 47,320
65,200 ------ ------ ------ ------ Budgeted capital expenditures
approved in 2008 that will be incurred in 2009 9,638 - - 19,310
----- ----- ----- ------ $26,738 $27,953 $47,320 $84,510 =======
======= ======= ======= 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 14 2 16 1000 HP 18 12 30 1200 to 1500 HP
3 15 18 -- -- -- Total 41 29 70 == == == Drilling rig 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 20 23 -- -- -- Total 41 29 70 == == ==
Production Services Division: Workover rig horsepower ratings: 400
HP 1 550 HP 69 600 HP 4 -- Total 74 == Wireline units 61 == Fishing
& Rental Tools Inventory $15 Million =========== DATASOURCE:
Pioneer Drilling Company, Inc. CONTACT: Lorne E. Phillips, CFO of
Pioneer Drilling Company, +1-210-828-7689; or Lisa Elliott, , or
Anne Pearson, , both of DRG&E, +1-713-529-6600, for Pioneer
Drilling Company Web Site: http://www.pioneerdrlg.com/
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