Pioneer Drilling Company ( PDC) Q3 2010 Earnings Conference Call November 4, 2010 11:00 AM ET Executives Anne Pearson – IR, DRG&E Stacy Locke – President and CEO Lorne Phillips – EVP, CFO Joe Eustace – President, Production Services Division Analysts John Keller – Stephens John Daniel – Simmons & Company Shawn Boyd – Westcliff Capital Management Presentation Operator
Also please note in this conference call, may contain certain references to non-GAAP measures. You can find reconciliations to the GAAP measures in Form 8-K as well as in today’s news release.Now with that, I’ll turn it over to Stacy Locke, Pioneer President and CEO. Stacy Locke Thank you Ann and good morning. Joining me on the call this morning is Red West, President of our Land Drilling division, Joe Eustace, President of our Production Services division and Lorne Phillips, our Chief Financial Officer. As you can see from the press release, we had another very solid quarter in the third quarter. Total revenues were up 16%. However, when you correct revenues Q2 to Q3 for turnkey activity, the baseline revenue growth was actually 24%, so an excellent quarter for us. EBITDA was also up substantially, 56% to $34 million and EBITDA as a percentage of revenues grew from 19% to 25% of revenues. Revenues derived from work in oil, mostly the oil shelf plays was also up. You may recall last quarter was the first quarter that we had oil related revenues in excess of 50%. In the third quarter, our oil related revenues were over 60% in both our drilling division and our production services division. Strategically, as you may recall, we have pushed both assets, both drilling and production service assets into oil over the last five years. In addition, strategically we have upgraded and repositioned our drilling fleet into the shale plays and secured that activity with term contracts. Today, approximately 70% of our working rigs are under term protection. Turning now to the drilling division, play by play, in the Marcellus we have seven active rigs there. We are installing the final three skid package systems on rigs there in the Marcellus. All are under term and before the stronger winter months hit, all seven rigs will have skid packages.
Turning to the Bakken, we’ve added our ninth rig there in October, so eight of the nine rigs are operating under term, and our performance in the Bakken has been superb. We have multiple rigs drilling sub 20 day, 20,000 for laterals on a consistent basis.In the Eagleford , we continue to have a commanding market position with 12 active rigs there. In the Iberia we have two rigs under term and just as a note, one of our 1,000 hp mechanical top drive rigs on a walking system is outperforming some of the latest technology rigs on a consistent basis in both penetration rate and cost per foot, which gets back to something you’ve heard me comment on in that past, that at the end of the day, the drilling crews and the way we run our operations is more important than the technology. In Columbia, we have eight rigs under term. We anticipate that in Columbia we will install or begin installing our final walking system on the rig there by the end of this quarter. Currently, we’re turning our focus on more successfully working our remaining 20 or so conventional rigs, and we’re seeing some hope and opportunity in that regard. Looking at production services, wireline and well services performed very well in the quarter while fishing and rentals remain challenged. Wireline, we’re on track to grow 33% in unit growth this year, ending the year with 84 units, up 21 from 63 at the end of 2009. We continue to position our wireline operations in every significant shale play the in country. We will soon be placing orders for six more units to be deployed mostly in the first quarter of 2011. Read the rest of this transcript for free on seekingalpha.com