![]() Company Presentation May 2009 (NYSE AMEX: PDC) www.pioneerdrlg.com Exhibit 99.1 |
![]() 2 Forward-looking Statements This presentation contains various forward-looking statements and information that are based on management’s current expectations and assumptions about future events. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “expect,” “anticipate,” “plan,” “intend,” “seek,” “will,” “should,” “goal,” and other words that convey the uncertainty of future events and outcomes. Forward-looking information includes, among other matters, statements regarding the Company’s anticipated growth, quality of assets, rig utilization rate, capital spending by oil and gas companies, production rates, the Company's growth strategy, and the Company's international operations. Although the Company believes that the expectations and assumptions reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions, including, among others: general and regional economic conditions and industry trends; the continued strength of the contract land drilling industry in the geographic areas where the Company operates; decisions about onshore exploration and development projects to be made by oil and gas companies; the highly competitive nature of the contract land drilling business; the Company’s future financial performance, including availability, terms and deployment of capital; the continued availability of qualified personnel; changes in governmental regulations, including those relating to the environment; the political, economic and other uncertainties encountered in the Company's international operations and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Should one or more of these risks, contingencies or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Many of these factors have been discussed in more detail in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2008 and quarterly report on Form 10Q for the quarter ended March 31, 2009. Unpredictable or unknown factors that the Company has not discussed in this presentation or in its filings with the Securities and Exchange Commission could also have material adverse effects on actual results of matters that are the subject of the forward-looking statements. All forward-looking statements speak only as the date on which they are made and the Company undertakes no duty to update or revise any forward-looking statements. We advise our shareholders to use caution and common sense when considering our forward looking statements. |
![]() 3 Pioneer Overview Businesses Land driller and production services company Drilling Services - 71 high-quality drilling rigs capable of drilling 6,000-18,000 feet / operations in Lower 48 & Colombia Production Services - 74 workover rigs, 61 wireline units, fishing & rental tools worth $15 million / operations in Lower 48 Ticker Symbol NYSE AMEX US: PDC Market Cap (5/18/09) $323 million Stock Price (5/18/09) $6.42 Average daily trading volume approximately 384,000 shares Public float approximately 50 million shares Employees 1,500 Headquarters San Antonio, Texas |
![]() 4 Balanced Business Mix, Focus on Returns Modern, high-quality drilling and well services fleet provides a competitive advantage in up and down markets – Over 80% of drilling rig fleet is new or upgraded since 2001 – Newest, most premium workover rig fleet in the U.S. Geographic diversification – Broad reach in the U.S. – Concentrated international operations in Colombia – Exploring other expansion opportunities in Latin America Production Services offers market diversification, strong margins Focused on buying/building assets at the right time at the right price |
![]() 5 Strategic Growth Initiatives Disciplined program of acquisitions and new-builds – Acquired 39 rigs through 9 strategic acquisitions – Built 31 rigs, with the newest 2000-horsepower rig to be delivered later in May 2009. International Expansion – September 2007– Launched land drilling operations in Latin America. Oilfield Services Diversification – March 2008 – Formed Production Services Division through the $340 million acquisition of WEDGE Companies and Competition Wireline. |
![]() 6 Revenue (1) EBITDA (2) Contribution by Division (1) Revenue percentages are based on revenues of $428.2 million and $170.1 million for Drilling Services and Production Services, respectively, for the trailing twelve months ended March 31, 2009. (2) Earnings before interest, taxes, depreciation and amortization, and impairments (EBITDA) percentages are based on EBITDA of $147.7 million and $60.0 million for Drilling Services and Production Services, respectively, for the trailing twelve months March 31, 2009. Drilling Services 72% Production Services 28% Drilling Services 71% Production Services 29% |
![]() 7 Drilling Services Division |
![]() 8 Drilling Services Operating Locations UT MT CO KS ND LA OK TX East Texas Division 22 Rigs South Texas Division 17 Rigs North Texas Division 8 Rigs Utah Division 6 Rigs North Dakota Division 7 Rigs International – Colombia 5 Rigs Cold Stacked Rigs 6 Rigs Division Rig Counts |
![]() 9 Efficient, High-Quality Assets One of the youngest fleets in the industry – Over 80% of fleet was either built new or has been upgraded and refurbished within the last six years – 44% of fleet comprised of new-build rigs or acquired rigs since 2001 – Requires less maintenance expense and provides competitive advantage in difficult market Designed for efficiency and effectiveness, with modern mud pumping and cleaning systems Iron roughnecks installed on 63% of active U.S. drilling rigs to enhance safety and efficiency Topdrives on 11 drilling rigs, 2 spares and 2 more pending delivery – Increased drilling speeds in both vertical and horizontal wells |
![]() 10 Focused on Growth and Return on Investment Maintained high utilization rate while growing fleet Emphasis on growth at the right price Disciplined program of acquisitions and new-builds Acquired 39 rigs at average of $2.4 million per rig Built 31 rigs at average cost of $9.8 million per rig * Fiscal year end was changed from March 31 to December 31 effecti ve on December 31, 2007 66% 91% 82% 79% 88% 96% 95% 95% 89% 89% 52% 8 16 20 24 35 50 56 65 69 70 71 0% 25% 50% 75% 100% - 10 20 30 40 50 60 70 80 Average Utilization Rig Count at Period End |
![]() 11 Strong Utilization Through the Cycles One of strongest drilling rig utilization rates in the industry – in top 2 over last 8 years Averaged 88% utilization through cycles since 1Q 2001 Drillers with the newest, highest quality equipment win customers in down cycles Source: Domestic utilization rates based on calendar years and obtained from Form 10-K, Form 10-Q reports and press releases. 0% 20% 40% 60% 80% 100% Q1 '01 Q3 '01 Q1 '02 Q3 '02 Q1 '03 Q3 '03 Q1 '04 Q3 '04 Q1 '06 Q3 '06 Q1 '07 Q3 '07 Q1 '08 Q3 '08 Q1 '09 Pioneer Helmerich & Payne Grey Wolf Patterson-UTI Nabors Bronco |
![]() 12 International Expansion Why Colombia? – Provides geographic diversification – Strong E&P spending expected to continue – Stable government encourages foreign investment – In 2008, drilling margins were 20% to 25% above US average drilling margins Current status of Colombian operations – 3 rigs operating under drilling contracts and actively marketing 2 rigs located in Colombia Pioneer Rig 301, National 110UE, diesel-electric, 1,500-HP rig operating outside the city of Neiva, Colombia. |
![]() 13 Challenging Year Ahead Oversupply of natural gas in U.S. putting downward pressure on price expectations for 2009. Lower natural gas price expectations, plus depressed stock prices, tight credit markets and global recession, have caused operators to significantly reduce 2009 capital budgets. For the week ending 5/8/09, the U.S. land rig count was 868 rigs, a decline of 55% from the August 2008 peak of 1,938 rigs*. The more recent diminishing rate of decline in the U.S. land rig count suggests a bottom in the industry cycle is near. Pioneer recently cold stacked 6 rigs that were operating in Western Oklahoma. * Source: Baker Hughes |
![]() 14 Production Services Division |
![]() 15 Advantages of Production Services Complementary services -- well services, wireline, fishing and rental tools – Less cyclical cash flow and earnings stream – New platforms for growth in domestic and internation market – Somewhat counter cyclical to land drilling business Premium assets with an average age of 1.5 years for workover rigs and 3 years for wireline units Attractive margins – approximately 45% to 50% in 2008 Overlapping market presence creates cross-selling opportunities Seasoned management team, each with over 25 years of industry experience and proven track record of managing growth Transformation of Pioneer from a pure-play U.S. land driller into a multi-national, energy services provider |
![]() 16 Production Services New-build Program New-build orientation – 99% of well service equipment is 550-600 horsepower rigs capable of working at depths of 20,000 feet – Custom-designed wireline units and proprietary open hole wireline tools New equipment strategy has led to gains in market share – Customers prefer new equipment – Young fleet attracts the best operating personnel – Minimal downtime and expenses – Increases efficiency and safety Pioneer workover rig, a new National 5C, 550 HP working outside the city of Bryan, Texas. |
![]() 0 12 24 45 59 61 6 20 27 55 74 74 0 10 20 30 40 50 60 70 80 2004 2005 2006 2007 2008 1Q 2009 17 Production Services New-build Program (Cont.) Fishing & Rental Services Gross Equipment and Tools Value Wireline Units And Workover Rigs 45 59 Wireline Units Workover Rigs Information for the years 2004 to 2007 represents workover rig and wireline unit counts and fishing and rental tool inventory values when the Production Services business was owned by WEDGE group. $- $2.8 $11.7 $12.9 $14.8 $14.8 $- $2 $4 $6 $8 $10 $12 $14 $16 2004 2005 2006 2007 2008 1Q 2009 Dollar amounts in millions |
![]() 18 Production Services Locations Geographic footprint that compliments Drilling Services Division • Well Services (74 workover rigs) • Wireline Services ( ) • Fishing and Rental Tools Services ($15 million equipment) UT MT CO KS ND LA OK TX 61 wireline units |
![]() 19 Management |
![]() 20 Experienced Management Team Wm. Stacy Locke - President and Chief Executive Officer Joined Pioneer as President in 1995 Seven years experience in investment banking, six years experience as exploration geologist B.A. in Geology from the University of California Santa Barbara, MBA in Finance from Southern Methodist University Lorne E. Phillips – Executive Vice President and Chief Financial Officer Joined Pioneer in February 2009, after ten years experience with Cameron International Corporation, most recently as Vice President and Treasurer International and multi-business unit experience, investment banking experience B.A. from Rice University, MBA from Harvard Graduate School of Business F.C. “Red” West - Executive Vice President and President of Drilling Service Division 45 years experience in the drilling services industry Supervised the drilling of over 7,000 wells Joe Eustace – Executive Vice President and President of Production Services Division Joined WEDGE in 2004 as President of WEDGE Oil and Gas Services Served as Group Vice President for Key Energy Services from 1998 – 2004 Served as VP of Operations for Dawson Production Services from 1982 until acquired by Key Energy Services in 1998 Carlos R. Pena – Vice President, General Counsel, Secretary and Compliance Officer Joined Pioneer in October 2008 and practicing law since 1992 Experience providing both outside corporate and securities counsel and in-house M&A counsel B.A. from Princeton, law degree from the University of Texas at Austin |
![]() 21 Experienced Management Team (Cont.) Left to Right: Donald Lacombe, Senior Vice President of Drilling Services Division – Marketing and Red West, President of the Drilling Services Division. Left to Right: Joe Freeman, Vice President of Well Services, Mark Gjorvig, Vice President of Wireline Services, Joe Eustace, President of the Production Services Division, Randy Watson, Vice President of Fishing and Rental Services. Drilling Services Division Production Services Division |
![]() 22 Financial Overview |
![]() 23 Historical Financial Performance Revenue 2004 - 2009 EBITDA (2) 2004 - 2009 (1) FY 2004 - FY 2007 data based on Company fiscal years ended March 31. Due to the change in fiscal year end from March 31 to December 31, FY Dec 2007 information represents the nine month fiscal year ended December 31, 2007. (2) See page 25 for EBITDA reconciliation. |
![]() 24 Capitalization Capital Expenditures Actuals FY 2008 Actuals 1Q 2009 Budget FY 2009 Routine 22.6 $ 6.5 $ 23.9 $ Discretionary 125.5 10.6 41.3 FY 2009 Budget 148.1 17.1 65.2 FY 2008 Budget carryover to be incurred in FY 2009 - 9.6 19.3 148.1 $ 26.7 $ 84.5 $ (In Millions) (In Millions) Capitalization At Mar 31, 2009 Cash 30.0 $ Debt: Senior secured credit facility $400 million 257.5 $ Subordinated notes payable and other 5.8 Total debt 263.3 $ Total shareholders' equity 414.6 $ Total capitalization 677.9 $ Debt to total capitalization ratio 39% |
![]() 25 Reconciliation of EBITDA to Net Income ($ in Millions) (1) Due to change in fiscal year end from March 31 to December 31 that was effective December 31, 2007, Pioneer had a nine month fiscal year ended December 31, 2007. Nine Months Fiscal Yr Qtr and FY Ended Ended Ended 3/31/04 3/31/05 3/31/06 3/31/07 12/31/07 (1) 12/31/08 03/31/09 EBITDA 16.6 41.8 111.4 179.9 104.2 214.8 27.8 Depreciation & Amortization (16.2) (23.1) (33.4) (52.9) (48.9) (88.1) (25.5) Net Interest (2.6) (1.7) 1.9 3.8 2.4 (11.8) (1.9) Impairment charges - - - - - (171.5) - Income Tax (Expense) Benefit 0.4 (6.4) (29.3) (46.6) (18.1) (6.1) 0.2 Net Income (Loss) (1.7) 10.8 50.6 84.2 39.6 (62.7) 0.6 Fiscal Year Ended |
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