Pioneer Drilling Company (PDC)

[Golden Cross]

Pioneer Drilling Reports Record Fiscal Second Quarter 2007 Results
Thursday November 2, 6:00 am ET
Second quarter revenues were up 60% to $106.9 million
Second quarter earnings per diluted share increased from $0.24 to $0.47
76% of the rig fleet is operating under contracts of 6 months to 2 years


SAN ANTONIO, Nov. 2 /PRNewswire-FirstCall/ -- Pioneer Drilling Company (Amex: PDC - News) today reported results for the three months ended September 30, 2006, which is the second quarter of its 2007 fiscal year.
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Revenues for the second quarter of fiscal 2007 grew to $106.9 million, compared to revenues of $67.0 million for the second quarter of fiscal 2006. This 60% increase in revenues was generated by a 35% increase in average revenues per revenue day to $20,272 per day, in addition to an 18% increase in the average number of rigs in Pioneer Drilling's fleet to 59.7 rigs. Average drilling margin(1) per revenue day increased 61% to $9,689 in the second quarter of fiscal 2007, compared to $6,019 in the second quarter of fiscal 2006 and 8% over first quarter of fiscal 2007. Net earnings for the second quarter of fiscal 2007 were $23.5 million, or $0.47 per diluted share, compared to net earnings of $11.1 million, or $0.24 per diluted share, for the second quarter of fiscal 2006. Pioneer Drilling began expensing stock compensation in the June 30, 2006 quarter and the stock compensation expense for second quarter of fiscal 2007 was $544,000 or $0.01 per diluted share. Weighted average shares of common stock outstanding on a diluted basis increased 6% to 50.1 million shares for the second quarter of fiscal 2007.

Revenue days during the second quarter of fiscal 2007 increased 19% to 5,274, compared to 4,446 revenue days for the second quarter of fiscal 2006. In the second quarter of fiscal 2007, revenue days by type of contract were 5,077 for daywork contracts, zero for turnkey contracts and 197 for footage contracts. In contrast, revenue days by type of contract in the second quarter of fiscal 2006 were 3,942 for daywork contracts, 96 for turnkey contracts and 408 for footage contracts. Pioneer Drilling's rig utilization rate was 97% for the second quarter of fiscal 2007, up slightly from 95% in the second quarter of fiscal 2006.

Wm. Stacy Locke, Pioneer Drilling's President and Chief Executive Officer, stated, "Demand for our rigs remained strong throughout the quarter and, on average, we continued to see modest increases in dayrates. Average drilling revenues per day increased $1,118 per revenue day to $20,272 in our fiscal second quarter of 2007, compared to our fiscal first quarter of 2007. We continued to pursue term drilling contracts during the quarter. Currently, 47 of our 62 rigs, or 76%, are operating under term contracts of six months to two years, of which 21 expire within the next six months, 14 have remaining terms of six to 12 months, seven have a remaining term of 12 to 18 months, and five have a remaining term in excess of 18 months. During the last 30 days, we have seen some softening in the market and a flattening in dayrates; however, we expect our customer demand and utilization rate to remain strong for the balance of the year.

"To date, we have completed 11 rigs of our new-build program and expect to have the four remaining rigs working under contract by the end of March 2007. We canceled the construction of one of the rigs in our new-build program due to a customer's change both in the type of rig needed and the drilling location, which would have required us to establish operations outside our operating regions," continued Mr. Locke. "Since April 1, 2006, the beginning of our new fiscal year, we have added six 1000-hp electric rigs: one rig to the Utah division; two rigs to the South Texas division; and three rigs to the North Texas division. We also added a 1000-hp mechanical rig to the Oklahoma division.

"Our investment in new-build rigs and our commitment to continue to upgrade and modernize our existing fleet has allowed Pioneer to expand its customer base. Currently, 58% of our rigs are working for publicly traded independents or major oil and gas companies. During the six months ended September 30, 2006, we spent approximately $14.1 million upgrading 14 rigs, using over 385 potential revenue days in the upgrade process.

"Since April 2001, we have built or upgraded 82% of our fleet, which we believe gives Pioneer the second-youngest fleet in the industry, with rigs that are designed to be efficient and cost effective. Over 90% of our rigs can drill horizontal and directional wells, 92% have dual high-powered mud pumps, 53% have modern mud-cleaning systems, 37% are premium electric, and 34% are quick-to-move and rig-up. In addition, beginning in January 2007, we will be adding iron roughnecks to all of our rigs over an 18-month period. We believe that our fleet is well positioned to be highly competitive in any market conditions we encounter."

Revenues for the first six months of fiscal 2007 were $200.4 million, compared to revenues of $126.9 million for the first six months of fiscal 2006. Net earnings during the first six months of fiscal 2007 were $43.0 million, or $0.86 per diluted share, compared to net earnings of $18.8 million, or $0.40 per diluted share, during the same period in fiscal 2006.

Revenue days were 10,155 during the first six months of fiscal 2007, compared to 8,749 revenue days for the comparable period of fiscal 2006. Pioneer Drilling's rig utilization rate for the first six months of fiscal 2007 was 96%, compared to 95% in last year's comparable six-month period.

Pioneer Drilling's management team will hold a conference call today, Thursday, November 2, 2006, at 11:00 a.m. Eastern time (10:00 a.m. Central), to discuss these results. To participate in the call, dial [phone] at least 10 minutes before the conference call begins and ask for the Pioneer Drilling conference call. A replay of the call will be available approximately two hours after the call ends and will be accessible until November 9, 2006. To access the replay, dial [phone] and enter the pass code 11073279#.

Investors, analysts and the general public can listen to the conference call over the Internet by accessing Pioneer Drilling's Web site at http://www.pioneerdrlg.com. To listen to the live call on the Web, please visit Pioneer Drilling's Web site at least 10 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live Webcast, an archive will be available shortly after the call. For more information, please contact Donna Washburn at DRG&E at [phone] or e-mail [e-mail].

Pioneer Drilling provides land contract drilling services to independent and major oil and gas operators drilling wells in Texas, Louisiana, Oklahoma and in the Rocky Mountain region. Its fleet consists of 62 land drilling rigs that drill in depth ranges between 6,000 and 18,000 feet.


(1) Drilling margin represents contract drilling revenues less contract
drilling costs. Pioneer Drilling believes that drilling margin is a
useful measure for evaluating its financial performance, although it
is not a measure of financial performance under generally accepted
accounting principles. However, drilling margin is a common measure
of operating performance used by investors, financial analysts,
rating agencies and Pioneer Drilling's management. A reconciliation
of drilling margin to net earnings is included in the operating
statistics table below in this release. Drilling margin as presented
may not be comparable to other similarly titled measures reported by
other companies.