Pioneer Stays 'Solid' Despite Market 'Softness'
Pioneer Drilling reported net income for the three months ended December 31, 2007 (the "Third Quarter") was $14.8 million, or $0.29 per diluted share, compared with net income of $11.8 million, or $0.23 per diluted share, for the three months ended September 30, 2007 (the "Second Quarter") and net income of $24.0 million, or $0.48 per diluted share, for the three months ended December 31, 2006.
Net income for the nine months ended December 31, 2007 was $39.6 million, or $0.79 per diluted share, compared to net income of $67.0 million, or $1.34 per diluted share, for the nine months ended December 31, 2006. The Third Quarter net income was impacted by a $0.04 per diluted share income tax benefit related to the completion of our federal income tax audit, certain tax benefits recognized for our investment in Colombia and a lower statutory tax rate for Colombian earnings as compared to the U.S. statutory tax rate.
Revenues for the Third Quarter were $104.6 million compared with $106.5 million for the Second Quarter and $112.4 million for the third quarter of 2006. The Third Quarter benefited from the increase in revenue generated by the start-up of operations in Colombia which was offset by the decrease in U.S. revenues of $9.3 million for the quarter over sequential quarter and $16.9 million for the quarter over the same quarter last year.
For the nine months ended December 31, 2007, revenue increased $1.1 million to $313.9 million from $312.8 million for the comparable nine months in 2006 due to the advent of Colombian operations, the addition of an average of 7 rigs which were offset by an 8% decline in rig utilization rates and a decrease in average revenues of $621 per day.
Contract drilling costs for the Third Quarter were down $1.5 million over the Second Quarter primarily due to the decline in utilization rates offset by higher than normal supplies, repair and maintenance costs for the start-up of Colombian operations. When compared to the same quarter last year, drilling costs were up $6.5 million primarily due to the increase in the number of rigs in our fleet, the addition of our Colombian operations and higher supplies, repairs and maintenance costs in our U.S. operations.
The increase in our fleet, both domestically and internationally, resulted in a $0.6 million increase in depreciation quarter over sequential quarter, $2.7 million increase over the same quarter last year, and $10.7 million increase for the nine month period ended December 31, 2007 over the same nine months in 2006.
General and administrative expenses increased $0.6 million quarter over sequential quarter, $1.7 million over the same quarter last year, and $3.0 million for the nine month period ended December 31, 2007 over the same nine months in 2006, primarily due to additional compensation-related costs and professional fees associated with enhancing the Company's corporate operations to meet the demands of expanding both internationally and into other oilfield service sectors.
Wm. Stacy Locke, President and CEO, commented, "We are pleased with our results for the third and final quarter of our reporting year. We've maintained solid margins despite experiencing some softness in the market. Our strong U.S. operations continue to provide a solid base for the expansion opportunities we are currently undertaking. Our Colombian operations are performing well with a contribution to pretax income of $1.6 million for the Third Quarter. Most of our international start-up expenses are behind us, we have commenced operations of our third rig in Colombia and we expect to add two more rigs this year."
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