SAN ANTONIO, Texas, Nov. 5 /PRNewswire-FirstCall/ -- Pioneer
Drilling Company, Inc. (NYSE Amex : PDC) today reported financial
and operating results for the three months ended September 30,
2009. Third Quarter 2009 Results Net loss for the third quarter was
$9.2 million, or $0.18 per share, compared with a net loss for the
second quarter of 2009 ("the prior quarter") of $6.3 million, or
$0.13 per share. Net income for the third quarter of 2008 ("the
year-earlier quarter") was $24.2 million, or $0.48 per diluted
share. Revenues for the third quarter were $74.4 million, compared
with $69.1 million for the prior quarter and $174.2 million for the
year-earlier quarter. EBITDA(1) for the third quarter was $15.2
million, compared to $17.9 million for the prior quarter and $64.7
million for the year-earlier quarter. First Nine Months of 2009
Results Net loss for the nine months ended September 30, 2009 was
$14.8 million, or $0.30 per share, compared with net income of
$55.2 million, or $1.09 per diluted share for the nine months ended
September 30, 2008. Revenues for the first nine months of 2009 were
$244.3 million, compared with $440.2 million for the same period
last year. EBITDA for the first nine months of 2009 was $60.9
million, compared to $154.3 million for the comparable period in
2008. Operating Results Revenues for the Drilling Services Division
were $48.1 million for the third quarter, a 5% increase from the
prior quarter. During the third quarter, the utilization rate for
our drilling rig fleet averaged 35%, flat with the prior quarter
and down from 96% utilization in the year-earlier quarter. Average
drilling revenues per day increased 4% and average operating costs
per day increased 22% in the third quarter, compared to the prior
quarter, due to a shift to more turnkey contracts and an increase
in our Colombian operations which represented a larger portion of
our drilling services operating results. Both turnkey contracts and
our Colombian operations have higher average revenue and operating
costs per day when compared to daywork contracts in the U.S. The
overall increase in average revenues per day was partly offset by
the impact of the expiration of six long-term drilling contracts
during the third quarter which were earning relatively high daywork
revenue rates. The expiration of these contracts also contributed
to a 27% decrease in Drilling Services margin(2) per day to $5,623
in the third quarter as compared to $7,723 in the prior quarter.
Revenues for the Production Services Division increased $2.9
million from $23.4 million in the second quarter to $26.3 million
in the third quarter. Production Services margin(2) increased 14%
to $9.6 million, compared to $8.5 million in the prior quarter.
Margin as a percentage of revenue increased one basis point to 37%
from the prior quarter. Currently, 65 of Pioneer's 74 workover rigs
have crews assigned and are operating or being actively marketed,
while the remaining nine workover rigs are idle with no crews
assigned. Our third quarter operating results reflect the positive
impact of a $1.3 million bad debt recovery relating to a customer's
past due account receivable balance for which we had previously
established an allowance for doubtful accounts in December 2008.
"In our Drilling Services Division, activity has improved in the
conventional drilling regions, and there is increasing demand for
our rigs in the domestic shale regions and in certain international
markets," said Wm. Stacy Locke, President and CEO of Pioneer
Drilling. The current environment continues to be challenging, but
we were successful in obtaining new drilling contracts to offset
the impact of six drilling rigs that came off long-term drilling
contracts during the third quarter. Utilization remained flat
during the third quarter and is showing modest improvement at 38%
currently as we begin the fourth quarter. "Because of increasing
activity in the shale regions and international markets, we are
focused on improving utilization and drilling margins by pursuing
new opportunities in these regions, and we are selectively
upgrading our drilling rigs to optimize our ability to meet the
demand. During the third quarter, we expanded our operations in the
Marcellus Shale to three drilling rigs, all of which are currently
operating, and we are marketing numerous additional drilling rigs
in the area. Likewise, in the Bakken Shale, we activated a third
rig in early October, have a fourth rig mobilizing to begin a new
contract today, and will have a fifth rig beginning operations next
week. We see additional rig opportunities in the Bakken for next
year. Rig demand is also improving in the Eagle Ford and
Haynesville Shale regions where we are already active. "In the
international arena, we have five drilling rigs in Colombia, all of
which are currently operating. We have also moved two 1,500
horsepower drilling rigs to Houston to prepare them for
international opportunities in Latin America. "In our Production
Services Division, pricing remained competitive through the third
quarter, but we see improvement in demand as reflected in the 12%
increase in revenues in the third quarter over the prior quarter,"
continued Mr. Locke. "During the third quarter, we expanded our
well servicing operations in the Williston Basin, Fayetteville
Shale and Louisiana as well as our wireline operations in the
Marcellus Shale, Haynesville Shale and Louisiana. All of these
regions have good near-term growth opportunities." "On October 5,
2009, we completed an amendment to our credit facility. The terms
of the amended credit facility provide us with more financial
covenant flexibility and the ability to pursue our growth
objectives," Locke said. Pioneer's working capital was $73.0
million at September 30, 2009, up from $70.0 million at June 30,
2009 and $64.4 million at December 31, 2008. Our cash and cash
equivalents were $53.3 million at the end of the third quarter, up
$9.6 million from the prior quarter and up $26.5 million from
December 31, 2008. For the nine months of 2009, cash equivalents
increased primarily due to cash provided by operations of $110.3
million, offset by $67.1 million of property and equipment
expenditures and $17.1 million of debt payments. We have $56.0
million of borrowing availability on our recently amended senior
secured revolving credit facility, with $257.5 million due at
maturity on August 31, 2012. 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 480-629-9692 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 November 12. To access the replay, dial (303)
590-3030 and enter the pass code 4176067 #. 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 . About Pioneer
Pioneer Drilling Company provides contract land drilling services
to independent and major oil and gas operators in Texas, Louisiana,
Oklahoma, Kansas, the Rocky Mountain and Appalachian regions 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, Rocky Mountain and Appalachian regions through its
Pioneer Production Services Division. Its fleet consists of 71 land
drilling rigs that drill at depths ranging from 6,000 to 25,000
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. 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, 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) 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 earnings (loss) 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. (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 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 earnings (loss) 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. - 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 Nine months
ended September 30, June 30, September 30, 2009 2008 2009 2009 2008
---- ---- ---- ---- ---- Revenues: Drilling services $48,084
$124,297 $45,720 $165,170 333,587 Production services 26,282 49,948
23,400 79,156 106,602 ------ ------ ------ ------ ------- Total
revenue 74,366 174,245 69,120 244,326 440,189 ------ ------- ------
------- ------- Costs and Expenses: Drilling services 35,315 70,342
28,437 107,880 198,115 Production services 16,638 25,025 14,906
50,260 53,871 Depreciation and amortization 26,952 24,225 26,069
78,467 61,924 Selling, general and administrative 8,892 12,840
8,951 27,870 32,712 Bad debt (recovery) expense (1,409) (260) 30
(1,713) (216) ------ ---- --- ------ ---- Total costs and expenses
86,388 132,172 78,393 262,764 346,406 ------ ------- ------ -------
------- Income (loss) from operations (12,022) 42,073 (9,273)
(18,438) 93,783 ------- ------ ------ ------- ------ Other
(expense) income: Interest expense (1,839) (3,773) (1,728) (5,555)
(9,612) Interest income 43 205 55 182 995 Other 222 (1,551) 1,140
847 (1,389) --- ------ ----- --- ------ Total other expense (1,574)
(5,119) (533) (4,526) (10,006) ------ ------ ---- ------ -------
Income (loss) before income taxes (13,596) 36,954 (9,806) (22,964)
83,777 Income tax benefit (expense) 4,406 (12,760) 3,547 8,133
(28,619) ----- ------- ----- ----- ------- Net earnings (loss)
$(9,190) $24,194 $(6,259) $(14,831) $55,158 ======= ======= =======
======== ======= Earnings (loss) per common share: Basic $(0.18)
$0.49 $(0.13) $(0.30) $1.11 ====== ===== ====== ====== =====
Diluted $(0.18) $0.48 $(0.13) $(0.30) $1.09 ====== ===== ======
====== ===== Weighted average number of shares outstanding: Basic
49,845 49,791 49,826 49,831 49,780 Diluted 49,845 50,449 49,826
49,831 50,426 PIONEER DRILLING COMPANY AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (in thousands) September 30, 2009
December 31, 2008 ------------------ ----------------- ASSETS
(unaudited) (audited) ------ Current assets: Cash and cash
equivalents $53,305 $26,821 Receivables, net of allowance for
doubtful accounts 70,828 99,423 Deferred income taxes 4,336 6,270
Inventory 4,855 3,874 Prepaid expenses and other current assets
3,250 8,902 ----- ----- Total current assets 136,574 145,290 Net
property and equipment 617,254 627,562 Intangible assets, net of
amortization 26,539 29,969 Other long-term assets 18,626 21,658
------ ------ Total assets $798,993 $824,479 ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ Current liabilities: Accounts
payable $16,680 $21,830 Current portion of long-term debt 2,093
17,298 Prepaid drilling contracts - 1,171 Accrued expenses 44,779
40,619 ------ ------ Total current liabilities 63,552 80,918
Long-term debt, less current portion 260,259 262,115 Other long
term liabilities 6,054 6,413 Deferred income taxes 65,325 60,915
------ ------ Total liabilities 395,190 410,361 Total shareholders'
equity 403,803 414,118 ------- ------- Total liabilities and
shareholders' equity $798,993 $824,479 ======== ======== PIONEER
DRILLING COMPANY AND SUBSIDIARIES Condensed Consolidated Statements
of Cash Flows (in thousands) (unaudited) Nine months ended
September 30, 2009 2008 ---- ---- Cash flows from operating
activities: Net earnings (loss) $(14,831) $55,158 Adjustments to
reconcile net earnings (loss) to net cash provided by operating
activities: Depreciation and amortization 78,467 61,924 Allowance
for doubtful accounts (1,237) 270 Gain on dispositions of property
and equipment (84) (512) Stock-based compensation expense 5,561
2,924 Deferred income taxes 7,527 10,700 Change in other assets
1,061 355 Change in non-current liabilities (1,169) (329) Changes
in current assets and liabilities 35,006 (4,735) ------ ------ Net
cash provided by operating activities 110,301 125,755 -------
------- Cash flows from investing activities: Acquisition of WEDGE
- (313,606) Acquisition of Competition Wireline - (26,770)
Acquisition of other production services businesses - (6,520)
Purchases of property and equipment (67,058) (99,794) Purchase of
auction rate securities - (16,475) Proceeds from sale of property
and equipment 608 2,712 Proceeds from insurance recoveries 36 2,638
--- ----- Net cash used in investing activities (66,414) (457,815)
------- -------- Cash flows from financing activities: Debt
repayments (17,060) (44,404) Proceeds from issuance of debt -
319,500 Debt issuance costs (77) (3,319) Proceeds from sale of
common stock - 672 Purchase of treasury stock (31) - Excess tax
benefit (reductions) for stock option exercises (235) 250 ---- ---
Net cash (used in) provided by financing activities (17,403)
272,699 ------- ------- Net increase (decrease) in cash and cash
equivalents 26,484 (59,361) Beginning cash and cash equivalents
26,821 76,703 ------ ------ Ending cash and cash equivalents
$53,305 $17,342 ======= ======= PIONEER DRILLING COMPANY AND
SUBSIDIARIES Operating Statistics (in thousands, except average
number of drilling rigs, utilization rate and revenue day
information) (unaudited) Three months ended Nine months ended
September 30, June 30, September 30, 2009 2008 2009 2009 2008 ----
---- ---- ---- ---- Drilling Services Division: Revenues $48,084
$124,297 $45,720 $165,170 $333,587 Operating costs 35,315 70,342
28,437 107,880 198,115 ------ ------ ------ ------- -------
Drilling services margin (1) $12,769 $53,955 $17,283 $57,290
$135,472 ======= ======= ======= ======= ======== Average number of
drilling rigs 71.0 67.7 70.7 70.6 67.1 Utilization rate 35% 96% 35%
41% 90% Revenue days 2,271 6,017 2,238 7,805 16,528 Average
revenues per day $21,173 $20,658 $20,429 $21,162 $20,183 Average
operating costs per day 15,550 11,691 12,706 13,822 11,987 ------
------ ------ ------ ------ Drilling services margin per day (2)
$5,623 $8,967 $7,723 $7,340 $8,196 ====== ====== ====== ======
====== Production Services Division: Revenues $26,282 $49,948
$23,400 $79,156 $106,602 Operating costs 16,638 25,025 14,906
50,260 53,871 ------ ------ ------ ------ ------ Production
services margin (1) $9,644 $24,923 $8,494 $28,896 $52,731 ======
======= ====== ======= ======= Combined: Revenues $74,366 $174,245
$69,120 $244,326 $440,189 Operating Costs 51,953 95,367 43,343
158,140 251,986 ------ ------ ------ ------- ------- Combined
margin $22,413 $78,878 $25,777 $86,186 $188,203 ======= =======
======= ======= ======== EBITDA (3) $15,152 $64,747 $17,936 $60,876
$154,318 ======= ======= ======= ======= ======== (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 (loss) 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 earnings
(loss) as an indication of operating performance or cash flows from
operating activities or as a measure of liquidity. A reconciliation
of net earnings (loss) 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
Earnings (Loss) (in thousands) (unaudited) Three months ended Nine
months ended September 30, June 30, September 30, 2009 2008 2009
2009 2008 ---- ---- ---- ---- ---- Combined margin $22,413 $78,878
$25,777 $86,186 $188,203 Selling, general and administrative
(8,892) (12,840) (8,951) (27,870) (32,712) Bad debt recovery
(expense) 1,409 260 (30) 1,713 216 Other income (expense) 222
(1,551) 1,140 847 (1,389) --- ------ ----- --- ------ EBITDA 15,152
64,747 17,936 60,876 154,318 Depreciation and amortization (26,952)
(24,225) (26,069) (78,467) (61,924) Interest income (expense), net
(1,796) (3,568) (1,673) (5,373) (8,617) Income tax benefit
(expense) 4,406 (12,760) 3,547 8,133 (28,619) ----- ------- -----
----- ------- Net earnings (loss) $(9,190) $24,194 $(6,259)
$(14,831) $55,158 ======= ======= ======= ======== ======= PIONEER
DRILLING COMPANY AND SUBSIDIARIES Capital Expenditures (in
thousands) (unaudited) Budget Nine months ------ Three months ended
ended Year Ending September 30, June 30, September 30, December 31,
2009 2008 2009 2009 2008 2009 ---- ---- ---- ---- ---- ---- Capital
expenditures: Drilling Services Division: Routine rigs $1,026
$3,736 $1,788 $6,710 $11,557 $13,100 Discretionary 14,932 15,211
5,455 26,450 47,929 47,100 Tubulars 92 - 1,102 2,062 1,050 5,000
New-builds and acquisitions - 11,531 - - 13,365 - --- ------ ---
--- ------ --- Total Drilling Services Division capital
expenditures 16,050 30,478 8,345 35,222 73,901 65,200 ------ ------
----- ------ ------ ------ Production Services Division: Routine
1,283 2,460 1,023 4,019 3,403 5,800 Discretionary 285 819 90 456
1,029 2,200 New-builds and acquisitions 729 13,614 246 5,454 22,443
7,000 --- ------ --- ----- ------ ----- Total Production Services
Division capital expenditures 2,297 16,893 1,359 9,929 26,875
15,000 ----- ------ ----- ----- ------ ------ Actual and budgeted
capital expenditures 18,347 47,371 9,704 45,151 100,776 80,200
------ ------ ----- ------ ------- ------ Budgeted capital
expenditures approved in 2008 that will be incurred in 2009 894 -
8,778 19,310 - 19,310 --- --- ----- ------ --- ------ $19,241
$47,371 $18,482 $64,461 $100,776 $99,510 ======= ======= =======
======= ======== ======= 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 2000 HP
3 16 19 --- --- --- Total 41 30 71 === === === Drilling rig depth
ratings: Less than 10,000 feet 8 2 10 10,000 to 13,900 feet 30 7 37
14,000 to 25,000 feet 3 21 24 --- --- --- Total 41 30 71 === ===
=== 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 ===========
Contacts: Lorne E. Phillips, CFO Pioneer Drilling Company
210-828-7689 Lisa Elliott / Anne Pearson / DRG&E / 713-529-6600
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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