Pioneer Plows through Second Quarter with $19.1MM Net Income
Pioneer Drilling Company, Inc. reported financial results for the three and six months ended June 30, 2008. As previously announced, the Company has transitioned to a December 31 fiscal year end; accordingly, the three months ended June 30 is reported as the second quarter of 2008.
Net income for the second quarter was $19.1 million, or $0.38 per diluted share, compared with net income of $11.8 million, or $0.24 per diluted share, for the three months ended March 31, 2008, and net income of $13.1 million, or $0.26 per diluted share, for the three months ended June 30, 2007 ("the year-earlier quarter"). The second quarter of 2008 included three months of operating results from our Production Services Division, which was formed on March 1, 2008 as a result of the acquisitions of the production service businesses of the WEDGE Group and Competition Wireline, as well as contributions from our Colombian operations, which commenced in the third quarter of 2007.
Revenues for the second quarter were $152.5 million, compared with $113.4 million for the prior quarter and $102.8 million for the year-earlier quarter. EBITDA(1) for the second quarter increased 47% to $53.4 million from the prior quarter and 50% from the year-earlier quarter. Additionally, the second quarter was impacted by a charge to selling, general and administrative expenses of approximately $1.0 million related to the Company's investigation of internal control over financial reporting and a charge to interest expense of approximately $0.2 million related to bank fees and incremental interest for obtaining a debt covenant waiver.
Net income for the six months ended June 30, 2008 was $31.0 million, or $0.61 per diluted share, compared with net income of $30.3 million, or $0.60 per diluted share, for the six months ended June 30, 2007. Revenues for the six months of 2008 were $266.0 million, compared with $206.1 million for the comparable period in 2007. EBITDA for the six months of 2008 increased 18% to $89.6 million from the comparable period in 2007 of $76.0 million.
"Our Drilling Services and Production Services divisions both performed well in the second quarter," said Wm. Stacy Locke, President and CEO. "Our drilling rig utilization and average margins per day for our Drilling Services division improved significantly from the prior quarter and our Production Services margins remained very solid. As a result of the strong demand in both divisions, we have approved the purchase of additional wireline units, fishing and rental equipment and in July, we secured a two-year term contract to build a land rig for the U.S. market. The rig, a 1500 horsepower SCR rig equipped with an automatic catwalk, iron roughneck and top-drive, is under construction and expected to be placed in service in December in the Rocky Mountain region."
The Drilling Services Division contributed $109.3 million of revenues for the second quarter, an increase of $9.2 million over the prior quarter and $6.5 million over the year-earlier quarter. Drilling Services revenues improved due to an increase in rig utilization to 90%, as compared to 84% in the first quarter, and a 14% increase in the Drilling Services margin(2) to $8,026 per day, up from $7,047 in the first quarter. Mr. Locke stated, "In June, dayrates reached their highest level so far this year and we anticipate continued improvement throughout the remainder of the year. In our international operations, we moved a fourth drilling rig into Colombia, which commenced drilling operations this week, and we are marketing another 1500 horsepower SCR rig that could be placed in service prior to year-end if we secure a drilling contract."
The Production Services Division contributed revenues of $43.3 million in the second quarter, compared to $13.4 million for the one-month period in the first quarter of 2008. Mr. Locke further stated, "The Production Services Division is performing better than expected and generated a margin(2) of 49% in the second quarter. We remain optimistic about the outlook for workover, wireline and fishing and rental services for the remainder of the year."
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