Pioneer Drilling Company (PDC)
Q1 2010 Earnings Call Transcript
May 6, 2010 11:00 am ET
Anne Pearson – IR, DRG&E
Stacy Locke – President and CEO
Lorne Phillips – EVP and CFO
Jim Rollyson – Raymond James
Steve Ferazani – Sidoti & Company
John Daniel – Simmons and Company
Brian Uhlmer – Pritchard Capital
John Keller – Stephens Investment Management
Previous Statements by PDC
» Pioneer Drilling Company Q4 2009 Earnings Call Transcript
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» Pioneer Drilling Q1 2009 Earnings Call Transcript
Good morning, ladies and gentleman. And thank you for standing by. Welcome to the Pioneer Drilling first quarter earnings call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions)
This conference is being recorded today, Thursday, May 6, 2010. I would now like to turn the conference over to Anne Pearson of DRG&E, Investor Relations. Please go ahead, ma'am.
Thank you, Mitch, and good morning, everybody. Welcome to Pioneer Drillings conference call to review first quarter results. Before management makes their formal remarks I have a few of the usual items to cover.
First, a replay of today's call will be available and is accessible by webcast, by going to the Investor Relations section of Pioneer's website and also by telephone replay through May 13th. You can find all of the replay information in today's news release.
Information recorded on this call speaks only as of today May 6, 2010, so any time-sensitive information may no longer be accurate as of the time of any replay. Management may make forward-looking statements today that are based on its beliefs and assumptions and information currently available to them.
Although management believes the expectations reflected in these statements are reasonable, they can give no assurance that they will prove to be correct. These statements are subject to certain risks, uncertainties and assumptions which are described in this morning's earnings release and also in the most recent filings with the SEC. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may differ materially.
Please also note that this conference call may contain certain references to non-GAAP measures. You can find reconciliations to the GAAP financial measures in Form 8-K as well as in this morning's news release.
Now, I'd like to turn the call over to Stacy Locke, Pioneer President and CEO. Stacy?
Thank you, Anne, and good morning. Joining me on the call this morning is Red West, our President of the Land Drilling Division; and Joe Eustace, President of the Production Services Division; and Lorne Phillips, our Chief Financial Officer.
While this first quarter was below our expectations in really everything revenue, EBITDA, and net loss, many of the contributing factors in this quarter were, what I believe are non-recurring and I'm going to go through those. And a lot was accomplished during the quarter, which I think will pay dividend in quarters to come.
I’d like this morning to talk briefly about EPS, because that's a shorter conversation. The production services businesses performed better than expectations. We were anticipating 5% to 7% revenue growth and it came in over 13%.
We were anticipating flat margins and they just picked up slightly, but did show modest improvement. All of the sectors performed in the quarter wireline really performed well this quarter, lots of activity.
The well servicing group continues to perform well. They were averaging 53% in Q4, and averaged 60% in Q1. And amazingly today, they are operating at over 80%. So that is building – that business is building nicely.
As well, well, the average hourly weight – rate for well servicing declined from 453 in the third quarter. We had a little anomalous bump in Q4 to 470, and we were back down to 444 average hourly rates in the first quarter. But that's holding firm, it was mostly due to a shift of some rig to lower margin areas, just due to activity changes. But it is holding firm there and we might see some increases as we move forward.
Fishing and rental, although still struggling, fish showing signs of improvement and did improve a little bit in the first quarter, compared to fourth quarter as well. So overall, EPS was a big contributor during this first quarter of the year and continues to perform well in second quarter.
Looking at land contract drillings, we actually exceeded our expectation and utilization of 45% to 47%, and finished the quarter an average of 49%. And we continue to have, what I’d called very steady improvements since then and we are currently running at about 61% utilizations today.
Where we really got hurt was our margin. Revenues were down and costs were up, and we had a lot more percentage of mobilization days in the quarter, relative to revenue days on certain rigs and that's, what I'm going to kind of walk through some of those specific issues that we dealt within the first quarter.
First, turning to Columbia. We mobilized our sixth and seventh rig into Columbia. Those were delayed, getting to location, and getting rigged up in part due to the fact we were continuing to finalize our contract terms with our customer there, as these rigs were moving until we sold out for a while as were finalizing these agreements.
And then, once we got to go ahead, they start moving rigs to location due to the fact that these are different types of contracts then what we’ve had in the past. They took longer to – and I would say, that our customer paid little more attention to the customization to the rig that they preferred, and so that took a little more time, money, labor, to get kicked off.