Pioneer Drilling Company, Inc. ( PDC) Q4 2011 Earnings Call February 21, 2012 11:00 a.m. ET Executives Stacy Locke - President and Chief Executive Officer Lorne Phillips - Executive Vice President and Chief Financial Officer Red West - Executive Vice President and President of Drilling Services Anne Pearson - DRG&L, Investor Relations Joe Eustace - Executive Vice President and President Production Services Analysts Brian Uhlmer - Global Hunter John Daniel - Simmons & Company John Keller - Stephens Inc. Michael Urban - Deutsche Bank Securities, Inc. Daniel Burke - Johnson Rice & Company Lenny Bianco - Raymond James & Associates Presentation Operator
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As a reminder, information reported on this call speaks only as of today, February 21, 2012, so any time sensitive information may no longer be accurate at the time of the replay. On this call this morning management may make forward-looking statements that are based on beliefs and assumptions and information currently available to them. Although they believe the expectations reflected in these statements are reasonable, they can give no assurance they will prove to be correct. They are subject to certain risks and uncertainties and assumptions that are described in this morning’s news release and also in recent public filings with the SEC. If one or more of these risks materializes or should underlying assumptions prove to be incorrect, actual results may differ materially.Also please note that this conference call may contain references to non-GAAP measures. You’ll find a reconciliation to the GAAP measures in this morning’s news release. Now I would like to turn the call over to Stacy Locke, Pioneer’s President and CEO. Stacy? Stacy Locke Thank you, Anne, and good morning. Joining me on the call here in San Antonio is Red West, President of our Drilling Services division; and Joe Eustace, President of our Production Services division; and Lorne Phillips, Chief Financial Officer. We have completed another solid quarter for Pioneer. Both revenue and EBITDA was up another 8%, that is eight quarters now of steady revenue and EBITDA growth, derived by a combination of unit growth and pricing. For Pioneer, because of the way we have positioned ourselves, we think this trend continues for at least another eight quarters and sets us up to be able to reduce a substantial amount of our indebtedness in 2014. Let me explain this in a little bit more detail by reviewing our unit growth starting with production services. For our wireline business, at the end of 2011, we ended the year with 105 units. That’s up 25% on the year which that year was up 33% on the prior year. So we have had very very significant unit growth in our wireline units mostly in case hole and mostly targeted to the horizontal shale plays. Today we are at a 107 units, so we are up an additional two units with 12 more wireline units on order. So as of, what's been ordered to date, sometimes by the summer, late summer, we should be a 119 wireline units.
Looking at well servicing, at the end of 2011, we had 89 rigs, that was up 20% for the year. Today, we are at 91 units, up an additional two units with 11 more workover rigs on order. Mind you these are all, like the rest of our fleet, all 550 and 600 horsepower, top of the line well service units.Now let me digress just a bit to talk about our new business line. On 12/31/11, we completed the acquisition of Go-Coil. Strategically, coiled tubing has been in our sides for a couple of years and we feel that it is a must have business line in our production services businesses. Coiled tubing has very similar characteristics to our wireline, which is high margin and low cost per units and offers excellent cross-selling with our other existing production services businesses, well service and wireline. These are the core businesses along with drilling that we have wanted to be in to provide to comprehensive onsite services to our horizontal customers. So Pioneer can now drill the original horizontal borehole. We can perforate that horizontal leg with our case hole wireline units. We can drill out all the plugs between the frac zones with our coiled tubing units and we can run tubing in a established production for the operator with our well servicing rigs. Granted, all of those services do a lot more than just that, but it’s pretty much a soups to nuts from the original borehole to putting the well on production. And just as importantly, we can provide maintenance and workover services with all of these business lines for the life of the borehole which is many many years into the future. Read the rest of this transcript for free on seekingalpha.com