Union Drilling, Inc. (Nasdaq: UDRL - News) announced today financial and operating results for the quarter and fiscal year ended December 31, 2007.
Revenues for the fourth quarter of 2007 were $67.4 million, a decrease of 7% compared to revenues of $72.1 million in the fourth quarter of 2006. Net income in the fourth quarter of 2007 was $3.9 million, or $0.18 per diluted share, a 55% decline compared to net income of $8.6 million, or $0.40 per diluted share, during the fourth quarter of 2006. EBITDA for the fourth quarter of 2007 decreased 23% to $18.0 million compared to $23.5 million reported in the same period last year. For additional information regarding EBITDA as a non-GAAP financial measure, please refer to the disclosures contained at the end of this release.
Christopher D. Strong, Union Drilling's President and Chief Executive Officer, commented, "Fourth quarter results, especially in our Appalachian and Arkoma Basin operations were substantially below the prior quarter and the fourth quarter of 2006. Reduced utilization of our lower horsepower rigs under short-term daywork contracts was the main driver of lower overall EBITDA. Above average precipitation and wide temperature fluctuation in Appalachia also hurt the performance of our rigs drilling under footage contracts. In Texas, we had some offhire on our Ideal rigs for warranty work and the installation of iron roughnecks that should be behind us. During the first two months of 2008, we have continued to experience low utilization, but we expect the recent above-average natural gas storage draws to be supportive of natural gas prices and drilling as we head into spring."
The Company's average revenue per revenue day increased 7% to $16,753 for the fourth quarter of 2007 compared to $15,677 for the fourth quarter of 2006, primarily due to the addition of several new rigs in its Texas division. These rigs earned a dayrate higher than the average rate earned in 2006, thus increasing the average rate per day. Average marketed rig utilization for the fourth quarter was 61.6%, down from 74.5% in the same period last year primarily as a result of a significant decrease in demand for smaller rigs in the Company's fleet as well as adverse weather conditions over much of our Appalachian operating region. Revenue days totaled 4,021 days compared to 4,597 days for the same period last year. This 13% decrease is the result of lower utilization partially offset by the addition of several rigs to the fleet. Drilling margins totaled $23.5 million, or 35% of revenues, for the fourth quarter of 2007 versus $30.2 million, or 42% of revenues, in the fourth quarter of 2006. Average drilling margin per revenue day during the fourth quarter totaled $5,833 in 2007 versus $6,579 in the prior year period, a decline of 11%. For additional information regarding drilling margin as a non-GAAP financial measure, please refer to the disclosures contained at the end of this release.
For the twelve months ended December 31, 2007, Union Drilling reported net income of $30.8 million, or $1.41 per diluted share, on revenues of $289.0 million, compared to net income of $31.9 million, or $1.47 per diluted share, on revenues of $256.9 million for 2006. EBITDA for 2007 was $93.7 million compared to $80.6 million reported in the same period last year. Revenues grew by approximately $32.1 million, or 12%, in fiscal year 2007 from fiscal year 2006, primarily due to the addition of new rigs in the Company's Texas operations. This was partially offset by a lower demand for certain smaller rigs in the Company's fleet.
Drilling margin for 2007 increased to $117.1 million, or 41% of revenues, compared to $101.8 million, or 40% of revenues last year. The Company totaled 17,421 revenue days on 68.0% utilization for the year versus 18,028 revenue days on 76.4% utilization for the same period in 2006. Utilization and revenue days during 2007 were negatively impacted by a significant decline in the demand for smaller rigs in the Company's fleet, the transition of the Company's Rocky Mountain rigs to the Fayetteville Shale, which was completed at the end of the second quarter of 2007, and an increase in the number of rigs available in the market. Revenue and drilling margin averaged $16,591 and $6,724 respectively per revenue day in 2007 compared to $14,252 and $5,648 during 2006.
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