SAN ANTONIO, Feb. 26 /PRNewswire-FirstCall/ -- Pioneer Drilling
Company, Inc. (NYSE Alternext US: PDC) today reported financial and
operating results for the three and twelve months ended December
31, 2008. Fourth Quarter 2008 Results Net income adjusted to
exclude the impact of impairment charges(1) was $18.7 million, or
$0.37 per diluted share for the fourth quarter of 2008. This
compares to net income of $24.2 million, or $0.48 per diluted
share, reported for the three months ended September 30, 2008 ("the
prior quarter"), and net income of $14.8 million, or $0.29 per
diluted share, reported for the three months ended December 31,
2007 ("the year-earlier quarter"). Net loss as reported for the
fourth quarter of 2008, which includes the impact of impairment
charges, was $117.9 million, or $2.37 per diluted share. At
December 31, 2008, we recognized a $118.6 million goodwill
impairment charge and a $52.8 million intangible asset impairment
charge as the result of an overall downturn in our industry.
Goodwill and intangible assets were recorded earlier in 2008 in
connection with the acquisitions that make up our Production
Services Division. Revenues for the fourth quarter were $170.7
million, compared with $174.2 million for the prior quarter and
$104.6 million for the year-earlier quarter. EBITDA(2) for the
fourth quarter was $60.4 million, compared to $64.7 million from
the prior quarter and $35.1 million for year-earlier quarter. Full
Year 2008 Results Net income adjusted to exclude the impact of the
impairment charges(1) was $73.9 million, or $1.47 per diluted
share, for the full year 2008, compared with net income of $56.9
million, or $1.13 per diluted share, for 2007. Net loss as reported
for 2008, which includes the impact of the two impairment charges,
was $62.7 million, or $1.26 per diluted share. Revenues for 2008
were $610.9 million, compared with $417.2 million for 2007. EBITDA
for 2008 increased 48% to $214.8 million from $144.6 million for
2007. Full year 2008 results include operating results from our
Production Services Division, which was formed on March 1, 2008.
Operating Highlights "During the fourth quarter, both our Drilling
Services Division and Production Services Division felt the effects
of the downturn in the energy sector," said Wm. Stacy Locke,
President and CEO of Pioneer Drilling. "In the face of declining
commodity prices, tight credit markets, depressed market
capitalizations and a worldwide recession, our customers abruptly
curtailed their capital spending. While the fourth quarter was
generally a good quarter, we have been surprised by the rate of
decline that began in mid-November across all rig classes and in
every geographic region. Currently, we are operating 34 of our 65
U.S. drilling rigs and three of our five Colombian drilling rigs
for an overall 53% utilization rate. "Revenues for the Drilling
Services Division were $123.3 million for the fourth quarter,
almost flat with the prior quarter, and as we anticipated, rig
utilization declined. Fourth quarter rig utilization averaged 87%
as compared to 96% in the prior quarter, and revenue days declined
to 5,529 from 6,017. "Revenues held stable due to higher average
revenues per day of $22,301. Drilling Services margin(3) per day
increased to $9,327 in the fourth quarter, a 4% increase over the
prior quarter of $8,967, despite an increase in drilling costs per
day to $12,974. This was the highest quarterly margin achieved
during 2008. "Colombian operations performed well during the
quarter; however, declining oil prices have began to curtail
capital spending plans much like in the U.S.," added Mr. Locke.
"Dayrates and rig utilization will likely be severely impacted for
the remainder of 2009. "Revenues for the Production Services
Division decreased 5% to $47.4 million for the fourth quarter,
compared to $49.9 million in the prior quarter of 2008. Production
Services margins(3) decreased 15% to $21.2 million, compared to
$24.9 million in the prior quarter, and margins as a percentage of
revenue also decreased to 45% as compared to 50% in the prior
quarter. Currently, 62 of our 74 workover rigs are operating and
the remaining 12 workover rigs are idle with no crews assigned. "As
a result of the rapid decline in drilling and production service
activity, we have reduced our workforce by approximately 37%,
reduced field wages by roughly 10%, cut numerous other expenses and
scaled back budgeted capital expenditures approved for 2009 to $65
million. In addition, budgeted capital expenditures previously
approved for 2008 of $19.3 million will carryover and be incurred
in 2009. "Our balance sheet is strong, with $64.4 million in
working capital at December 31, 2008, up from $60.4 at September
30. We have good liquidity with $26.8 million in cash and cash
equivalents as of December 31, 2008 and borrowing availability of
$133.2 million as of February 23, 2009 on our senior secured
revolving credit facility," he said. Conference Call Pioneer's
management team will hold a conference call today at 2:00 p.m.
Eastern Time (1:00 p.m. Central Time), to discuss these results. To
participate in the call, dial 303-262-2055 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 March 5. To access the replay, dial (303)
590-3000 and enter the pass code 11125734#. 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 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 70 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), 59 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) 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. - Financial Statements and Information Follow -
Contacts: Lorne E. Phillips, CFO Pioneer Drilling Company
210-828-7689 Lisa Elliott / Anne Pearson / DRG&E / 713-529-6600
PIONEER DRILLING COMPANY AND SUBSIDIARIES Condensed Consolidated
Statements of Operations (in thousands, except per share data)
Three months ended (unaudited) Years ended December 31, September
30, December 31, 2008 2007 2008 2008 2007 (unaudited) Revenues:
Drilling services 123,303 104,589 124,297 456,890 417,231
Production services 47,392 - 49,948 153,994 - Total revenue
$170,695 $104,589 $174,245 $610,884 $417,231 Costs and Expenses:
Drilling services 71,731 63,749 70,342 269,846 250,564 Production
services 26,226 - 25,025 80,097 - Depreciation and amortization
26,221 16,661 24,225 88,145 63,588 Selling, general and
administrative 12,123 5,809 12,840 44,834 19,608 Bad debt expense
639 (15) (260) 423 2,612 Impairment of goodwill 118,646 - - 118,646
- Impairment of intangible assets 52,847 - - 52,847 - Total
operating costs and expenses 308,433 86,204 132,172 654,838 336,372
(Loss) income from operations (137,738) 18,385 42,073 (43,954)
80,859 Other (expense) income: Interest expense (3,460) (1) (3,773)
(13,072) (16) Interest income 261 808 205 1,256 3,282 Other 471 97
(1,551) (918) 136 Total other (expense) income (2,728) 904 (5,119)
(12,734) 3,402 (Loss) Income before income taxes (140,466) 19,289
36,954 (56,688) 84,261 Income tax benefit (expense) 22,562 (4,512)
(12,760) (6,057) (27,398) Net (loss) earnings $(117,904) $14,777
$24,194 $(62,745) $56,863 (Loss) Earnings per common share: Basic
$(2.37) $0.30 $0.49 $(1.26) $1.15 Diluted $(2.37) $0.29 $0.48
$(1.26) $1.13 Weighted average number of shares outstanding: Basic
49,818 49,651 49,791 49,789 49,638 Diluted 49,818 50,188 50,449
49,789 50,180 PIONEER DRILLING COMPANY AND SUBSIDIARIES Condensed
Consolidated Balance Sheets (in thousands) December 31, December
31, 2008 2007 ASSETS Current assets: Cash and cash equivalents
$26,821 $76,703 Receivables, net 87,161 47,370 Unbilled receivables
12,262 7,861 Deferred income taxes 6,270 3,670 Inventory 3,874
1,180 Prepaid expenses and other current assets 8,902 5,073 Total
current assets 145,290 141,857 Net property and equipment 627,562
417,022 Deferred income taxes - 573 Intangible assets, net of
amortization 29,913 - Other long-term assets 21,714 760 Total
assets $824,479 $560,212 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $21,830 $21,424 Current
portion of long-term debt 17,298 - Prepaid drilling contracts 1,171
1,933 Accrued expenses 40,619 18,693 Total current liabilities
80,918 42,050 Long-term debt, less current portion 262,115 - Other
long term liabilities 6,413 254 Deferred taxes 60,915 46,836 Total
liabilities 410,361 89,140 Total shareholders' equity 414,118
471,072 Total liabilities and shareholders' equity $824,479
$560,212 PIONEER DRILLING COMPANY AND SUBSIDIARIES Condensed
Consolidated Statements of Cash Flows (in thousands) Years ended
December 31, 2008 2007 (unaudited) Cash flows from operating
activities: Net (loss) earnings $(62,745) $56,863 Adjustments to
reconcile net (loss) earnings to net cash provided by operating
activities: Depreciation and amortization 88,145 63,588 Allowance
for doubtful accounts 1,592 2,612 (Gain) loss on dispositions of
property and equipment (805) 3,385 Stock-based compensation expense
4,597 3,744 Impairment of goodwill and intangible assets 171,493
Deferred income taxes (2,310) 12,126 Change in other assets 265
(513) Change in non-current liabilities (621) (177) Changes in
current assets and liabilities (13,220) 10,282 Net cash provided by
operating activities 186,391 151,910 Cash flows from investing
activities: Acquisition of WEDGE, net of cash acquired (313,621) -
Acquisition of Competition Wireline, net of cash acquired (26,772)
- Acquisition of other production services businesses (9,301) -
Purchases of property and equipment (147,455) (154,027) Purchase of
auction rate securities, net (15,900) - Proceeds from sale of
property and equipment 4,008 3,776 Proceeds from insurance
recoveries 3,426 - Net cash used in investing activities (505,615)
(150,251) Cash flows from financing activities: Payments of debt
(87,767) - Proceeds from issuance of debt 359,400 - Debt issuance
costs (3,319) - Proceeds from sale of common stock 784 217 Excess
tax benefit of stock option exercises 244 73 Net cash provided by
financing activities 269,342 290 Net (decrease) increase in cash
and cash equivalents (49,882) 1,949 Beginning cash and cash
equivalents 76,703 74,754 Ending cash and cash equivalents $26,821
$76,703 PIONEER DRILLING COMPANY AND SUBSIDIARIES Operating
Statistics (in thousands) (unaudited) Three months ended Years
ended December 31, September 30, December 31, 2008 2007 2008 2008
2007 Drilling Services Division: Revenues $123,303 $104,589
$124,297 $456,890 $417,231 Operating costs 71,731 63,749 70,342
269,846 250,564 Drilling services margin (1) $51,572 $40,840
$53,955 $187,044 $166,667 Average number of drilling rigs 68.7 67.3
68.0 67.4 66.1 Utilization rate 87% 86% 96% 89% 89% Revenue days
5,529 5,343 6,017 22,057 21,492 Average revenues per day $22,301
$19,575 $20,658 $20,714 $19,413 Average operating costs per day
12,974 11,931 11,691 12,234 11,658 Drilling services margin per day
(2) $9,327 $7,644 $8,967 $8,480 $7,755 Production Services
Division: Revenues $47,392 $- $49,948 $153,994 $- Operating costs
26,226 - 25,025 80,097 - Production services margin (1) $21,166 $-
$24,923 $73,897 $- Combined: Revenues $170,695 $104,589 $174,245
$610,884 $417,231 Operating Costs 97,957 63,749 95,367 349,943
250,564 Combined margin $72,738 $40,840 $78,878 $260,941 $166,667
EBITDA (3) $60,447 $35,143 $64,747 $214,766 $144,583 (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 Years
ended December 31, September 30, December 31, 2008 2007 2008 2008
2007 Combined margin $72,738 $40,840 $78,878 $260,941 $166,667
General and administrative (12,123) (5,809) (12,840) (44,834)
(19,608) Bad debt expense (recoveries) (639) 15 260 (423) (2,612)
Other income (expense) 471 97 (1,551) (918) 136 EBITDA 60,447
35,143 64,747 214,766 144,583 Depreciation and amortization
(26,221) (16,661) (24,225) (88,145) (63,588) Impairment of goodwill
(118,646) - - (118,646) - Impairment of intangible assets (52,847)
- - (52,847) - Interest income (expense), net (3,199) 807 (3,568)
(11,816) 3,266 Income tax expense 22,562 (4,512) (12,760) (6,057)
(27,398) Net (loss) earnings $(117,904) $14,777 $24,194 $(62,745)
$56,863 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
Year ended December 31, December 31, 2008 2008 Net loss as reported
$(117,904) $(62,745) Impairment of goodwill 118,646 118,646
Impairment of intangible assets 52,847 52,847 Tax benefit
recognized from impairment (34,886) (34,886) Net earnings adjusted
to exclude impairment charge impact (4) $18,703 $73,862 Basic
weighted average number of shares outstanding, as reported 49,818
49,789 Effect of dilutive securities 255 546 Diluted weighted
average number of shares outstanding adjusted for impairment charge
impact 50,073 50,335 Diluted EPS adjusted to exclude impairment
charge impact $0.37 $1.47 Diluted EPS as reported (5) $(2.37)
$(1.26) (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) Three months ended December 31,
September 30, 2008 2007 2008 Capital expenditures: Drilling
Services Division: Routine rigs $5,209 $5,570 $3,736 Discretionary
13,105 14,350 15,211 Tubulars 44 2,740 - New-builds and
acquisitions 16,916 3,012 11,531 Total Drilling Services Division
capital expenditures 35,274 25,672 30,478 Production Services
Division: Routine 1,337 - 2,460 Discretionary 146 - 819 New-builds
and acquisitions 10,563 - 13,614 Total Production Services Division
capital expenditures 12,046 - 16,893 Budgeted capital expenditures
approved for 2009 - - - Budgeted capital expenditures approved for
2008 that will be incurred in 2009 - - - Total capital expenditures
$47,320 $25,672 $47,371 Budget Years ended Year Ending December 31,
December 31, 2008 2007 2009 Capital expenditures: Drilling Services
Division: Routine rigs $16,766 $20,753 $13,100 Discretionary 61,034
53,300 32,100 Tubulars 1,094 14,808 5,000 New-builds and
acquisitions 30,281 69,205 - Total Drilling Services Division
capital expenditures 109,175 158,066 50,200 Production Services
Division: Routine 4,740 - 5,800 Discretionary 1,175 2,200
New-builds and acquisitions 33,006 - 7,000 Total Production
Services Division capital expenditures 38,921 - 15,000 Budgeted
capital expenditures approved for 2009 - - 65,200 Budgeted capital
expenditures approved for 2008 that will be incurred in 2009 - -
19,310 Total capital expenditures $148,096 $158,066 $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 59 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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