Pioneer Drilling Completes Acquisition of Seven Rigs

Pioneer Drilling has completed the acquisition of the drilling assets of Sawyer Drilling & Services, Inc., based in Shreveport, Louisiana. Pioneer paid $12 million for the seven rig drilling fleet and related yard equipment. The fleet consists of seven mechanical 700 to 1200 horsepower rigs, capable of drilling to depths of 8,000 to 14,000 feet.

Wm. Stacy Locke, Pioneer Drilling's President and Chief Executive Officer, stated, "Sawyer Drilling has been a well run drilling contractor for 44 years and has operated in east Texas, north Louisiana and south Arkansas. We expect a majority of Sawyer Drilling's field personnel to join us and continue working from Pioneer's East Texas Division. This acquisition has increased the fleet in the East Texas Division to 18 rigs."

Mr. Locke added, "All seven rigs are currently performing turnkey contracts in east Texas. Pioneer has entered into an agreement to provide six of the rigs on a daywork basis to Sawyer Drilling to complete the turnkey jobs in progress. We estimate that while on daywork to Sawyer Drilling, each of these rigs will generate a maximum of $800 margin per day. Most of the jobs in progress will be completed by March 31, 2004, but these relatively low margins will negatively impact our previously anticipated drilling margin for the month of March. Once the jobs in progress are completed, Pioneer will be drilling Sawyer's backlog of contracts on a turnkey basis, which we expect to be more profitable."

Additionally, Pioneer announced the purchase of the assets of A&R Trejo Trucking. Pioneer paid $1.2 million for 23 trucks and related rig moving assets. Roughly one-half of the assets will be operated from the Company's South Texas Division trucking yard and the reminder will be moved to the East Texas Division later this year. Mr. Locke stated, "We expect that the additional rig moving equipment will significantly reduce our rig mobilization costs."