Exhibit 99.1
Contacts: | Bill Hibbetts, Senior VP & CFO Pioneer Drilling Company 210-828-7689 | |||
FOR IMMEDIATE RELEASE | Ken Dennard /ksdennard@drg-e.com Lisa Elliott /lelliott@drg-e.com DRG&E / 713-529-6600 |
PIONEER DRILLING REPORTS
FISCAL 2007 RESULTS
Fourth quarter revenues were up 25% to $103.3 million
Fourth quarter earnings per diluted share was $0.34
May 17, 2007 – SAN ANTONIO, TEXAS – Pioneer Drilling Company (AMEX: PDC) today reported results for the three months ended March 31, 2007, which is the fourth quarter of its 2007 fiscal year.
Revenues for the fourth quarter of fiscal 2007 grew to $103.3 million, compared to revenues of $82.8 million for the fourth quarter of fiscal 2006. This 25% increase in revenues was generated by a 13% increase in average revenues per revenue day to $19,863 per day, in addition to a 16% increase in the average number of rigs in Pioneer Drilling’s fleet to 64.3 rigs. Average drilling margin(1) per revenue day of $8,253 in the fourth quarter of fiscal 2007 was relatively consistent with the $8,268 recorded in the fourth quarter of fiscal 2006. Net earnings for the fourth quarter of fiscal 2007 were $17.2 million, or $0.34 per diluted share, compared to net earnings of $18.0 million, or $0.36 per diluted share, for the fourth quarter of fiscal 2006. Pioneer Drilling began expensing stock compensation in fiscal 2007, and the stock compensation expense for the fourth quarter of fiscal 2007 was $587,000. Weighted average shares of common stock outstanding on a diluted basis increased to 50.1 million shares, from 49.1 million shares.
Revenue days during the fourth quarter of fiscal 2007 increased 11% to 5,203, compared to 4,701 revenue days for the fourth quarter of fiscal 2006. Pioneer Drilling’s rig utilization rate was 91% for the fourth quarter of fiscal 2007, down 4% from 95% in the fourth quarter of fiscal 2006.
Wm. Stacy Locke, Pioneer Drilling’s President and Chief Executive Officer, stated, “Fiscal 2007 was the most profitable year in Pioneer Drilling’s history. In addition to exceptional revenue and earnings growth, we added 10 premium new-build rigs to our fleet and have now completed our 15-rig new-build program. Pioneer has made a commitment to providing its customers safe operations and a modern and efficient fleet. In addition to new-build rigs, we made over $19 million in equipment upgrades to existing rigs, consisting primarily
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of new, efficient engines, triplex mud pumps and modern mud-cleaning systems. In March, we installed our first two iron roughnecks and anticipate installing roughly 33 more in fiscal 2008. In April, we installed our first company-owned top drive and will add two more within the next 90 days. As land rig capacity in the U.S. continues to increase, we believe that it is more important than ever to maintain a rig fleet that is modern, efficient, safe and capable of drilling horizontal and directional wells. Also, our customer base is larger and more established today than any other time in our past, with over 70% of our rigs working for large independents or majors.”
Mr. Locke further commented, “Current softness in the U.S. land-rig market will likely bottom out in the summer, and dayrates should firm up towards the end of fiscal 2008. Natural gas prices are far better than most people anticipated and will probably be strong enough later in the fiscal year and next year to generate rig demand sufficient to overcome the steadily increasing supply of land rigs in the U.S. market. Excluding our five low horsepower rigs in Oklahoma, forward dayrates range from $15,500 to $22,000, depending on rig class and horsepower, and excluding top drives and fuel.”
He also stated, “In the Company’s fourth quarter of fiscal 2007, average margins per day and rig utilization declined more than we anticipated. Daywork drilling margins per revenue day declined 14%, to $8,564, as compared to $9,993 in the third quarter. In the fourth quarter, average daywork revenues declined $749 per day while average daywork costs increased $679 per day. The increased daily daywork costs were primarily the result of increased labor and supply, repair and maintenance costs associated with stacking out drilling rigs. Rig utilization declined to 91% in the fourth quarter, as compared to 98% in the third quarter.”
Mr. Locke added, “We expect that our rig utilization will decline very little from this level over the next two or three quarters and begin to increase at the end of fiscal 2008. Also impacting drilling margins per day and earnings was the lack of profitability in our Oklahoma Division. The shallow rig market of western Oklahoma continued to weaken during the fourth quarter as a result of rigs stacking out and footage and dayrates precipitously declining. However, through cost containment and an improving market, the division should begin to show improvement in the current quarter.”
Currently, 30 of the Company’s 66 rigs, or 45%, are operating under term contracts of six months to two years. Four of the term contracts will expire in the current quarter and an additional eight will expire during the second quarter of fiscal 2008. Term contracts cover approximately 4,893 revenue days, or 32%, of the remainder of calendar 2007 and 2,874, or 12%, of calendar 2008.
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Revenues for the 12 months of fiscal 2007 increased 46% to $416.2 million, compared to revenues of $284.1 million for fiscal 2006, while net earnings grew 66% during fiscal 2007 to $84.2 million, or $1.68 per diluted share, compared to net earnings of $50.6 million, or $1.06 per diluted share, during fiscal 2006.
Revenue days were 20,930 during the 12 months of fiscal 2007, compared to 18,164 revenue days for fiscal 2006. Pioneer Drilling’s rig utilization rate for both fiscal years was 95%.
Pioneer Drilling’s management team will hold a conference call today, Thursday, May 17, at 11:00 a.m. Eastern time (10:00 a.m. Central), to discuss these results. To participate in the call, dial (303) 262-2139 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 May 24, 2007. To access the replay, dial (303) 590-3000 and enter the pass code 11089300#.
Investors, analysts and the general public can listen to the conference call over the Internet by accessing Pioneer Drilling’s Web site athttp://www.pioneerdrlg.com. To listen to the live call on the Web, please visit Pioneer Drilling’s Web site at least 10 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live Webcast, 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-maildmw@drg-e.com.
Pioneer Drilling provides land contract drilling services to independent and major oil and gas operators drilling wells in Texas, Louisiana, Oklahoma, Kansas and in the Rocky Mountain region. Its fleet consists of 66 land drilling rigs that drill in depth ranges between 6,000 and 18,000 feet.
(1) | Drilling margin represents contract drilling revenues less contract drilling costs. Pioneer Drilling believes that drilling margin is a useful measure for evaluating its financial performance, although it is not a measure of financial performance under generally accepted accounting principles. However, drilling margin is a common measure of operating performance used by investors, financial analysts, rating agencies and Pioneer Drilling’s management. A reconciliation of drilling margin to net earnings is included in the operating statistics table below in this release. Drilling margin as presented may not be comparable to other similarly titled measures reported by other companies. |
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 timing and installation of iron roughnecks and topdrives, future natural gas price trends, future dayrates, future demand and market competitiveness of Pioneer Drilling’s rig fleet, including our ability to continue to obtain term contracts, the future employment of Pioneer Drilling’s rig fleet, overall market demand and utilization rates for 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.
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Such statements are subject to various risks, uncertainties and assumptions. Should one or more of those risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. These risks 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, 2006 and subsequent filings with the SEC.
The forecasted capital expenditures set forth below contain assumptions management believes are reasonable, based on information available as of the date of this news release. Pioneer Drilling is not undertaking any obligation to update this forecasted information as conditions change or as additional information becomes available. There can be no assurance that any of the forecast estimates can or will be achieved.
- Tables to Follow -
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PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended (unaudited) | Years Ended March 31, | |||||||||||||||||||
March 31, | Dec. 31, 2006 | |||||||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||||||
Revenues: | ||||||||||||||||||||
Contract drilling | $ | 103,347 | $ | 82,840 | $ | 112,421 | $ | 416,178 | $ | 284,148 | ||||||||||
Costs and Expenses: | ||||||||||||||||||||
Contract drilling | 60,406 | 43,972 | 58,659 | 224,423 | 166,211 | |||||||||||||||
Depreciation | 14,736 | 9,519 | 13,969 | 52,856 | 33,387 | |||||||||||||||
General and administrative | 2,607 | 1,953 | 2,743 | 11,123 | 6,793 | |||||||||||||||
Bad debt expense (recovery) | — | (177 | ) | 800 | 800 | (152 | ) | |||||||||||||
Total operating costs | 77,749 | 55,267 | 76,171 | 289,202 | 206,239 | |||||||||||||||
Operating income | 25,598 | 27,573 | 36,250 | 126,976 | 77,909 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | — | (32 | ) | (9 | ) | (73 | ) | (236 | ) | |||||||||||
Interest income | 881 | 720 | 836 | 3,828 | 2,069 | |||||||||||||||
Other | 8 | 32 | 13 | 57 | 71 | |||||||||||||||
Total other | 889 | 720 | 840 | 3,812 | 1,904 | |||||||||||||||
Income before income taxes | 26,487 | 28,293 | 37,090 | 130,788 | 79,813 | |||||||||||||||
Income tax expense | (9,269 | ) | (10,325 | ) | (13,102 | ) | (46,609 | ) | (29,246 | ) | ||||||||||
Net earnings | $ | 17,218 | $ | 17,968 | $ | 23,988 | $ | 84,179 | $ | 50,567 | ||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.35 | $ | 0.37 | $ | 0.48 | $ | 1.70 | $ | 1.08 | ||||||||||
Diluted | $ | 0.34 | $ | 0.36 | $ | 0.48 | $ | 1.68 | $ | 1.06 | ||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||
Basic | 49,619 | 48,337 | 49,603 | 49,603 | 46,808 | |||||||||||||||
Diluted | 50,127 | 49,105 | 50,146 | 50,132 | 47,506 |
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PIONEER DRILLING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2007 | March 31, 2006 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 84,945 | $ | 91,174 | ||
Receivables, net | 57,698 | 35,544 | ||||
Contract drilling in progress | 9,837 | 9,620 | ||||
Deferred income taxes | 2,175 | 990 | ||||
Prepaid expenses | 3,653 | 2,208 | ||||
Total current assets | 158,308 | 139,536 | ||||
Net property and equipment | 342,901 | 260,784 | ||||
Other assets | 286 | 358 | ||||
Total assets | $ | 501,495 | $ | 400,678 | ||
Liabilities and Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,626 | $ | 16,041 | ||
Federal income taxes payable | — | 6,835 | ||||
Prepaid drilling contracts | — | 140 | ||||
Accrued expenses | 15,593 | 9,616 | ||||
Total current liabilities | 34,219 | 32,632 | ||||
Other non-current liability | 346 | 388 | ||||
Deferred taxes | 38,821 | 26,982 | ||||
Total liabilities | 73,386 | 60,002 | ||||
Total shareholders’ equity | 428,109 | 340,676 | ||||
Total liabilities and shareholders’ equity | $ | 501,495 | $ | 400,678 | ||
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PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(in thousands)
(unaudited)
Three Months Ended | Years Ended March 31, | |||||||||||||||||||
March 31, | Dec. 31 2006 | |||||||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||||||
Revenues by contract: | ||||||||||||||||||||
Daywork contracts | $ | 96,915 | $ | 79,097 | $ | 108,808 | $ | 399,188 | $ | 252,103 | ||||||||||
Turnkey contracts | 3,445 | — | — | 3,445 | 10,830 | |||||||||||||||
Footage contracts | 2,987 | 3,743 | 3,613 | 13,545 | 21,215 | |||||||||||||||
Total | $ | 103,347 | $ | 82,840 | $ | 112,421 | $ | 416,178 | $ | 284,148 | ||||||||||
Drilling costs by contract: | ||||||||||||||||||||
Daywork contracts | $ | 54,856 | $ | 41,711 | $ | 55,726 | $ | 211,334 | $ | 143,129 | ||||||||||
Turnkey contracts | 2,615 | — | — | 2,615 | 7,449 | |||||||||||||||
Footage contracts | 2,935 | 2,261 | 2,933 | 10,474 | 15,633 | |||||||||||||||
Total | $ | 60,406 | $ | 43,972 | $ | 58,659 | $ | 224,423 | $ | 166,211 | ||||||||||
Drilling margin by contract (1) (2): | ||||||||||||||||||||
Daywork contracts | $ | 42,059 | $ | 37,386 | $ | 53,082 | $ | 187,854 | $ | 108,974 | ||||||||||
Turnkey contracts | 830 | — | — | 830 | 3,381 | |||||||||||||||
Footage contracts | 52 | 1,482 | 680 | 3,071 | 5,582 | |||||||||||||||
Total | $ | 42,941 | $ | 38,868 | $ | 53,762 | $ | 191,755 | $ | 117,937 | ||||||||||
(1) Reconciliation of drilling margin to net earnings: | ||||||||||||||||||||
Drilling margin | $ | 42,941 | $ | 38,868 | $ | 53,762 | $ | 191,755 | $ | 117,937 | ||||||||||
Depreciation | (14,736 | ) | (9,519 | ) | (13,969 | ) | (52,856 | ) | (33,387 | ) | ||||||||||
General and administrative | (2,607 | ) | (1,953 | ) | (2,743 | ) | (11,123 | ) | (6,793 | ) | ||||||||||
Bad debt expense | — | 177 | (800 | ) | (800 | ) | 152 | |||||||||||||
Other income (expense) | 889 | 720 | 840 | 3,812 | 1,904 | |||||||||||||||
Income tax expense | (9,269 | ) | (10,325 | ) | (13,102 | ) | (46,609 | ) | (29,246 | ) | ||||||||||
Net earnings | $ | 17,218 | $ | 17,968 | $ | 23,988 | $ | 84,179 | $ | 50,567 | ||||||||||
(2) Drilling margins represent drilling revenues less contract drilling costs. |
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PIONEER DRILLING COMPANY AND SUBSIDIARIES
Operating Statistics
(unaudited)
Three Months Ended | Years Ended March 31, | |||||||||||||||||||
March 31, | Dec. 31 2006 | |||||||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||||||
Average number of rigs | 64.3 | 55.3 | 62.3 | 60.8 | 52.3 | |||||||||||||||
Utilization rate | 91 | % | 95 | % | 98 | % | 95 | % | 95 | % | ||||||||||
Revenue days by contract: | ||||||||||||||||||||
Daywork contracts | 4,911 | 4,503 | 5,312 | 19,995 | 16,138 | |||||||||||||||
Turnkey contracts | 81 | — | — | 81 | 558 | |||||||||||||||
Footage contracts | 211 | 198 | 260 | 854 | 1,468 | |||||||||||||||
Total | 5,203 | 4,701 | 5,572 | 20,930 | 18,164 | |||||||||||||||
Average revenues per day: | ||||||||||||||||||||
Daywork contracts | $ | 19,734 | $ | 17,565 | $ | 20,483 | $ | 19,964 | $ | 15,622 | ||||||||||
Turnkey contracts | $ | 42,531 | $ | — | $ | — | $ | 42,531 | $ | 19,409 | ||||||||||
Footage contracts | $ | 14,156 | $ | 18,904 | $ | 13,896 | $ | 15,861 | $ | 14,452 | ||||||||||
All contracts | $ | 19,863 | $ | 17,622 | $ | 20,176 | $ | 19,884 | $ | 15,643 | ||||||||||
Average costs per day: | ||||||||||||||||||||
Daywork contracts | $ | 11,170 | $ | 9,263 | $ | 10,491 | $ | 10,569 | $ | 8,869 | ||||||||||
Turnkey contracts | $ | 32,284 | $ | — | $ | — | $ | 32,284 | $ | 13,349 | ||||||||||
Footage contracts | $ | 13,910 | $ | 11,419 | $ | 11,281 | $ | 12,265 | $ | 10,649 | ||||||||||
All contracts | $ | 11,610 | $ | 9,354 | $ | 10,527 | $ | 10,723 | $ | 9,151 | ||||||||||
Drilling margin per day (3): | ||||||||||||||||||||
Daywork contracts | $ | 8,564 | $ | 8,302 | $ | 9,993 | $ | 9,395 | $ | 6,753 | ||||||||||
Turnkey contracts | $ | 10,247 | $ | — | $ | — | $ | 10,247 | $ | 6,059 | ||||||||||
Footage contracts | $ | 246 | $ | 7,485 | $ | 2,615 | $ | 3,596 | $ | 3,802 | ||||||||||
All contracts | $ | 8,253 | $ | 8,268 | $ | 9,649 | $ | 9,161 | $ | 6,492 | ||||||||||
(3) | Drilling margin per revenue day represents average revenue per revenue day less average cost per revenue day. |
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PIONEER DRILLING COMPANY AND SUBSIDIARIES
Capital Expenditures
(in thousands)
Three Months Ended | Budget Year Ending | |||||||||||||||||
March 31, | Dec. 31, 2006 | Years Ended March 31, | ||||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||||
Capital expenditures: | ||||||||||||||||||
Routine rig | $ | 4,724 | $ | 3,895 | $ | 6,523 | $ | 17,832 | $ | 12,898 | $ | 18,739 | ||||||
Average per revenue day | $ | 908 | $ | 833 | $ | 1,171 | $ | 852 | $ | 710 | ||||||||
Discretionary: | ||||||||||||||||||
Rig upgrades | $ | 3,183 | $ | 5,096 | $ | 518 | $ | 19,917 | $ | 21,446 | $ | 15,400 | ||||||
Iron roughnecks and topdrives | 3,602 | — | — | 3,602 | — | 18,250 | ||||||||||||
Spare equipment | 1,736 | 387 | 1,185 | 8,457 | 11,037 | 3,500 | ||||||||||||
Other | 3,706 | 803 | 3,266 | 9,022 | 5,157 | 5,400 | ||||||||||||
Total discretionary | $ | 12,227 | $ | 6,286 | $ | 4,969 | $ | 40,999 | $ | 37,640 | $ | 42,550 | ||||||
Tubulars | $ | 3,589 | $ | 308 | $ | 46 | $ | 13,942 | $ | 6,151 | $ | 16,450 | ||||||
Total routine, discretionary and tubulars | $ | 20,540 | $ | 10,489 | $ | 11,538 | $ | 72,773 | $ | 56,689 | $ | 77,739 | ||||||
New-builds and acquisitions | 9,487 | 26,739 | 19,981 | 74,457 | 72,182 | — | ||||||||||||
Total capital expenditures | $ | 30,027 | $ | 37,228 | $ | 31,519 | $ | 147,229 | $ | 128,871 | $ | 77,739 | ||||||
PIONEER DRILLING COMPANY AND SUBSIDIARIES
Rig Information
Rig Type | ||||||
Mechanical | Electric | Total Rigs | ||||
Rig horsepower ratings: | ||||||
550 to 700 HP | 6 | — | 6 | |||
750 to 900 HP | 15 | 2 | 17 | |||
1000 HP | 17 | 12 | 29 | |||
1200 to 1500 HP | 3 | 11 | 14 | |||
Total | 41 | 25 | 66 | |||
Rig 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 | 16 | 19 | |||
Total | 41 | 25 | 66 | |||
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