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Bronco Drilling Company, Inc. Announces First Quarter 2011 Results

Bronco Drilling Company, Inc., (Nasdaq/GS:BRNC), announced today financial and operational results for the three months ended March 31, 2011.

Consolidated Results

Revenues for the first quarter of 2011 were $37.0 million compared to $37.3 million for the fourth quarter of 2010 and $22.3 million for the first quarter of 2010. Net loss for the first quarter of 2011 was $7.4 million compared to a net loss of $2.5 million for the previous quarter and a net loss of $7.4 million for the first quarter of 2010. The Company’s fully diluted earnings per share for the quarter ended March 31, 2011, were a loss of $0.27 based on 27.5 million shares.

In the quarter the company recognized certain non-recurring charges related to the fluctuation in the fair value of a warrant in the amount of $10.3 million, a one-time charge related to the early extinguishment of debt in the amount of $2.0 million and a loss on sale and impairment of drilling rigs and related equipment of $1.9 million. Absent these non-recurring charges results from recurring items was a profit of $.05 per fully diluted share for the quarter.

Land Drilling

Average marketed land rigs for the first quarter of 2011 was 24 flat from the previous quarter and down from 37 for the first quarter of 2010. Revenue days for the quarter decreased to 2,088 from 2,152 for the previous quarter and increased from 1,428 for the first quarter of 2010. Utilization for the first quarter of 2011 was 96% compared to 96% for the previous quarter and 43% for the first quarter of 2010. Average daily cash margin for our land drilling fleet for the quarter ended March 31, 2011 was $6,324 compared to $6,008 for the previous quarter and $2,897 for the first quarter of 2010.

About Bronco Drilling

Bronco Drilling Company, Inc., a publicly held company headquartered in Edmond, Oklahoma, is a provider of contract land drilling services to oil and natural gas exploration and production companies. Bronco’s common stock is quoted on The Nasdaq Global Select Market under the symbol “BRNC.” For more information about Bronco Drilling Company, Inc., visit http://www.broncodrill.com.

 
 
Bronco Drilling Company, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share par value)
     
March 31, December 31,
  2011     2010  
ASSETS (Unaudited)
 
CURRENT ASSETS
Cash and cash equivalents $ 14,797 $ 11,854
Restricted cash - 2,700
Receivables
Trade and other, net of allowance for doubtful accounts of
$968 and $891 in 2011 and 2010, respectively 22,796 24,656
Affiliate receivables, net of allowance of $800 1,546 1,508
Unbilled receivables 856 428
Income tax receivable 5,671 5,700
Current deferred income taxes 2,558 2,765
Current maturities of note receivable from affiliate 1,639 1,607
Prepaid expenses   1,038     329  
 
Total current assets 50,901 51,547
 
PROPERTY AND EQUIPMENT - AT COST
Drilling rigs and related equipment 304,886 315,085
Transportation, office and other equipment   16,281     16,236  
321,167 331,321
Less accumulated depreciation   104,093     105,242  
217,074 226,079
 
OTHER ASSETS
Investment in Challenger 38,730 38,730
Investment in Bronco MX 21,433 20,632
Debt issue costs and other 4,617 3,362
Non-current assets held for sale and discontinued operations   7,000     1,680  
71,780 64,404
   
$ 339,755   $ 342,030  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
Accounts payable $ 8,674 $ 7,945
Accrued liabilities 8,757 7,847
Current maturities of long-term debt   96     95  
 
Total current liabilities 17,527 15,887
 
LONG-TERM DEBT, less current maturities 4,150 6,730
 
WARRANT 14,690 4,407
 
DEFERRED INCOME TAXES 17,387 21,664
 

COMMITMENTS AND CONTINGENCIES

 
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 100,000
shares authorized; 27,598 and 27,236 shares
issued and outstanding at March 31, 2011 and December 31, 2010 276 277
 
Additional paid-in capital 309,874 310,580
 
Accumulated other comprehensive income 1,811 1,012
 
Retained earnings (Accumulated deficit)   (25,960 )   (18,527 )
Total stockholders' equity 286,001 293,342
   
$ 339,755   $ 342,030  
 
 
Bronco Drilling Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
   
Three Months Ended March 31,
  2011       2010  
(Unaudited)
REVENUES
Contract drilling revenues $ 37,006 $ 22,295
 
EXPENSES
Contract drilling 23,801 18,159
Depreciation and amortization 5,659 7,705
General and administrative 4,209 4,217
Loss (gain) on Bronco MX transaction - (1,058 )
Impairment of drilling rigs and related equipment 679 -
Loss on sale of drilling rigs and related equipment   1,175     -  
  35,523     29,023  
 
Income (loss) from continuing operations 1,483 (6,728 )
 
OTHER INCOME (EXPENSE)
Interest expense (571 ) (1,456 )

Loss from extinguishment of debt

(1,975 ) -
Interest income - 46
Equity in income (loss) of Challenger - (599 )
Equity in income (loss) of Bronco MX 1 (209 )
Other 25 48
Change in fair value of warrant   (10,283 )   272  
  (12,803 )   (1,898 )
Loss from continuing operations before income taxes (11,320 ) (8,626 )
Income tax benefit  

(3,981

)   (2,621 )
 
Loss from continuing operations

(7,339

) (6,005 )
Loss from discontinued operations, net of tax  

(94

)   (1,414 )
NET LOSS $ (7,433 ) $ (7,419 )
 
Loss per common share-Basic
Continuing operations (0.27 ) (0.23 )
Discontinued operations   (0.00 )   (0.05 )
Loss per common share-Basic $ (0.27 ) $ (0.28 )
 
Loss per common share-Diluted
Continuing operations (0.27 ) (0.23 )
Discontinued operations   (0.00 )   (0.05 )
Loss per common share-Diluted $ (0.27 ) $ (0.28 )
 
Weighted average number of shares outstanding-Basic   27,468     26,850  
 
Weighted average number of shares outstanding-Diluted   27,468     26,850  
 

Non-GAAP Financial Measures

This press release includes a presentation of average daily cash margin for our land drilling fleet, which is not a financial measure recognized under generally accepted accounting principles, or GAAP. Average daily cash margin is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus income tax expense, other expense, general and administrative expense and depreciation, amortization and impairment, and divided by revenue days for the period. We have presented average daily cash margin because we use this metric as an integral part of our internal reporting to measure our performance and to evaluate the performance of our senior management. We consider this metric to be important indicators of the operational strength of our business. A limitation of these metrics, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management evaluates the costs of such tangible and intangible assets through other financial measures, such as capital expenditures, investment spending and return on capital. Therefore, we believe that average daily cash margin provides useful information to our investors regarding our performance and overall results of operations. Average daily cash margin is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either net income as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. In addition, this metric is not intended to represent funds available for dividends, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.

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