Pioneer Drilling Company ( PDC) Q1 2011 Earnings Call May 5, 2011 11:00 AM ET Executives Ann Pearson – DRG&E Investor Relations Stacy Locke – President and CEO Lorne Phillips – EVP and CFO Analysts Judd Bailey – Jefferies & Company John Daniel – Simmons & Company Brian Uhlmer – Global Hunter Securities John Keller – Stephens Inc. Jim Rollison – Raymond James Janice Rut – Pritchard Capital Roger Reed – Morgan Keegan Mike Kelly – Kennedy Capital Jeff Kagan [ph] – Milwaukee Private Wealth Management Presentation Operator
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» Pioneer Drilling Company Q1 2010 Earnings Call Transcript
Stacy LockeThank you and good morning everyone. Joining us on the call today is Red West, President of our Drilling Services Division and Lorne Phillips, our Chief Financial Officer. Overall, Q1 was about as we’d expected. Both revenues and EBITDA were up higher than expected quarter-over-quarter, a little over 3%. I’m not going to review many of the financials in my comments, Lorne is going to go over that in just a second, but what I think is exciting about our Q1 and where we are year to date is the achievement of what I would call our critical strategic objectives for 2011 – one is putting stacked rigs back to work, and two is growing our three core businesses in oil and liquid-rich unconventional plays: that’s land drilling, wire line and well services. With respect to putting stacked rigs back to work, our new West Texas endeavor has exceeded our expectations by threefold and could end up exceeding by fourfold the end of the year. We had budgeted at the beginning of the year to relocate four rigs to West Texas on a timeframe of one in May, one in July, one in September and one in November. We were fortunate, we were received well in West Texas when we began intense bidding in that market at the beginning of the year, and it allowed us to put all four rigs into that market by the end of March. So we were way accelerated on that opportunity. More importantly, we have now executed an additional nine contracts for rigs that’ll be relocated mostly out of our stacked inventory of rigs in North and East Texas, but we will be relocating one that’s been quasi-active from our South Texas market. We anticipate, we are readying the first three of these rigs currently and we anticipate that we’ll have the first two working in West Texas by June, the second two working there by July, then I’m saying the beginning of June, the beginning of July; two more by the beginning of September and two more by the beginning of November, and one more by the beginning of December. That’s the nine rigs.
Eight of those are under one-year term contracts and one is under a six-month term contract. In addition, we’ve identified another group of rigs that we are marketing there that could possibly make it to the West Texas market also by the end of the year, but we have not secured contracts for those rigs yet. So the expected margins from that operation are somewhere in the $3500 per day to $4500 per day range, so therefore about every three rigs we move out there will approach new build economics or new build margin at about a quarter of the cost. So these are very high rate of return opportunities for the company and we’re excited about that long-term.In addition of course, if you assume a 69% utilization starting point, which is about where we are today, this will allow us to over these next few quarters bring that utilization rate up over 80%. I’m very, very proud of our team for taking this start-up division from zero to 13 rigs in less than 12 months. It was just a great effort on everybody’s part. Read the rest of this transcript for free on seekingalpha.com