Company Reports Diluted EPS of $0.39 on Revenues of $70.5 Million
FORT WORTH, Texas, May 3 /PRNewswire-FirstCall/ -- Union Drilling, Inc. (NASDAQ:UDRL) announced today financial and operating results for the three months ended March 31, 2007.
Revenues for the first quarter of 2007 were $70.5 million, up 25% compared to revenues of $56.6 million in the first quarter of 2006. EBITDA for the first quarter of 2007 was $23.9 million, compared to $17.0 million reported in the same period last year. For additional information regarding EBITDA as a non-GAAP financial measure, please refer to the disclosures contained at the end of this release. Net income in the first quarter of 2007 was $8.5 million, or $0.39 per diluted share, versus net income of $7.0 million, or $0.32 per diluted share, during the first quarter of 2006.
Christopher D. Strong, Union Drilling's President and Chief Executive Officer, stated, "In the first quarter, results from the Company's Texas and Appalachian divisions were mostly in line with our expectations. In Texas, we received the last three of our six Ideal rigs during the first quarter with the final rig delivered at the end of March. In the Appalachian Basin, after a very dry and mild start to 2007, the region reverted to a more typical pattern of significant snow and rainfall at the end of the first quarter and into April. In spite of these challenging conditions and mostly due to increased activity in the area, rig utilization was actually slightly higher than it was in the first quarter of 2006 when the weather was much more favorable. On a sequential basis, average rig margin per day increased in both divisions over the fourth quarter of 2006.
"Results of operations in the Arkoma Basin were significantly below our expectations. Some of our smaller, privately held customers curtailed their programs and were probably waiting for more clarity on end of winter natural gas storage and shoulder season pricing. Overall, utilization in this division was significantly below the first quarter of 2006 and the prior quarter. While pricing did not decline, margins fell sequentially as long-term variable costs often become fixed during short periods of off hire. Early second quarter contracts and revenue days have picked up, so the worst of this poor performance in the Arkoma Basin appears to be behind us.
"Looking forward, we're seeing some pricing weakness emerging in the Barnett Shale as the rig supply continues to grow. In the Appalachian division, utilization will increase heading into the drier summer months after some of the weather related delays that persisted through April diminish. By the end of the second quarter, there should be three more rigs running in this market compared to last year with higher average rates as well. Arkoma Basin activity is expected to pick up, although we still need to place one of the rigs that was moved into the Fayetteville Shale play from the Rockies and we have two rigs temporarily down for maintenance." Operating Statistics The Company's average revenue per revenue day was $16,237 for the first quarter of 2007 compared to $13,085 for the first quarter of 2006. Revenue days totaled 4,344 days, compared to 4,324 days for the same period last year. Drilling margins totaled $29.3 million, or 42% of revenues, for the first quarter of 2007, versus $21.6 million, or 38% of revenues, in the first quarter of 2006. For additional information regarding drilling margin as a non-GAAP financial measure, please refer to the disclosures contained at the end of this release. Average marketed rig utilization for the first quarter was 70.5%, down from 77.0% in the same period last year.
Conference Call Union Drilling's management team will be holding a conference call on Friday, May 4, 2007, at 9:30 a.m. eastern time. To participate in the call, dial (303) 262-2140 at least ten minutes before the conference call begins and ask for the Union Drilling conference call. To listen to the live call on the internet, please visit Union Drilling's web site at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live call, a telephonic replay will be available through May 11, 2007 and may be accessed by calling (303) 590-3000 and using the pass code 11088677#. Also, an archive of the webcast will be available after the call for a period of 60 days on the "Investor Relations" section of the Company's website at http://www.uniondrilling.com/ .
About Union Drilling Union Drilling, Inc., headquartered in Ft. Worth, Texas, provides contract land drilling services and equipment, primarily to natural gas producers, in the United States. Union Drilling currently owns 77 rigs and specializes in unconventional drilling techniques.
This press release contains various forward-looking statements and information that are based on management's belief as well as assumptions made by and information currently available to management. Forward-looking information includes statements regarding the Company's anticipated growth, demand from the Company's customers, capital spending by oil and gas companies and the Company's expectations regarding its new rigs and the U. S. land drilling sector. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions, including, among other matters: general and regional economic conditions and industry trends; the continued strength or weakness of the contract land drilling industry in the geographic areas where the Company operates; decisions about onshore exploration and development projects to be made by oil and gas companies; the highly competitive nature of the contract land drilling business; the Company's future financial performance, including availability, terms and deployment of capital; the continued availability of qualified personnel; and changes in governmental regulations, including those relating to the environment. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. These risks, as well as others, are discussed in greater detail in the Company's filings with the Securities and Exchange Commission, including the Company's 10-K.
Contacts: Union Drilling, Inc. Christopher D. Strong, CEO
A.J. Verdecchia, CFO
817-735-8793 DRG&E
Ken Dennard / Ben Burnham
713-529-6600 - Tables to follow - Union Drilling, Inc. Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited) Three Months Ended
March 31,
2007 2006
Revenues
Total revenues 70,532 56,579 Cost and expenses
Drilling operations 41,251 34,968
Depreciation and amortization 8,916 5,187
General and administrative 5,405 4,701 Total cost and expenses 55,572 44,856 Operating income 14,960 11,723 Interest expense (422) (1)
(Loss) gain on sale of assets (27) 82
Other income 35 37 Income before income taxes 14,546 11,841 Income tax expense 6,046 4,869 Net income $8,500 $6,972
Earnings per common share:
Basic $0.39 $0.33
Diluted $0.39 $0.32 Weighted-average common shares outstanding:
Basic 21,533,709 21,166,109
Diluted 21,747,094 21,602,107 Union Drilling, Inc. Operating Statistics
(in thousands, except per day data) Three Months Ended
March 31,
2007 2006 Revenues $70,532 $56,579
Drilling margins $29,281 $21,611 Revenue days 4,344 4,324
Marketed rig utilization 70.5% 77.0% Revenue per revenue day $16,237 $13,085 Drilling margin per revenue day $6,741 $4,998 Union Drilling, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) March 31, December 31,
2007 2006
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $20 $20
Accounts receivable (net of allowance
for doubtful accounts of $884 and $839
at March 31, 2007 and December 31, 2006,
respectively) 41,862 47,613
Inventories 1,153 1,073
Prepaid expenses and other assets 3,013 3,921
Assets held for sale 1,729 2,144
Deferred taxes 5,230 4,686 Total current assets 53,007 59,457
Goodwill 7,909 7,909
Intangible assets (net of accumulated
amortization of $629 and $528 at
March 31, 2007 and December 31, 2006,
respectively) 2,371 2,472
Property, buildings and equipment (net
of accumulated depreciation of $77,890
and $69,338 at March 31, 2007 and
December 31, 2006, respectively) 215,718 187,084
Other assets 397 496 Total assets $279,402 $257,418 Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $16,752 $17,018
Current portion of long-term obligations 2,738 2,508
Other current obligations 1,697 2,333
Current portion of advances from customers 3,595 1,613
Accrued expense and other liabilities 12,124 8,972 Total current liabilities 36,906 32,444
Revolving credit facility 32,271 27,810
Long-term obligations 5,419 5,256
Deferred taxes 26,031 23,481
Other long-term liabilities 2,217 828 Total liabilities 102,844 89,819 Stockholders' equity:
Common stock, par value $.01 per share;
75,000,000 shares authorized; 21,554,372
and 21,523,577 shares issued and
outstanding at March 31, 2007
and December 31, 2006, respectively 216 215
Additional paid in capital 137,144 136,686
Retained earnings 39,198 30,698 Total stockholders' equity 176,558 167,599 Total liabilities and stockholders' equity $279,402 $257,418 EBITDA is earnings before net interest, income taxes, depreciation and amortization and non-cash impairment. The Company believes EBITDA is a useful measure of evaluating its financial performance because of its focus on the Company's results from operations before net interest, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles. However, EBITDA is a common alternative measure of operating performance used by investors, financial analysts and rating agencies. A reconciliation of EBITDA to net earnings is included below. EBITDA as presented may not be comparable to other similarly titled measures reported by other companies.
Union Drilling, Inc. (in thousands) Three Months Ended
March 31,
2007 2006
Calculation of EBITDA:
Net income $8,500 $6,972
Interest expense 422 1
Income tax expense 6,046 4,869
Depreciation and amortization 8,916 5,187 EBITDA $23,884 $17,029
Drilling margin represents contract drilling revenues less contract drilling costs. Union Drilling believes that drilling margin is a useful measure for evaluating its financial performance, although it is not a measure of financial performance under generally accepted accounting principles. However, drilling margin is a common measure of operating performance used by investors, financial analysts, rating agencies and Union Drilling's management. A reconciliation of drilling margin to operating income is included below. Drilling margin as presented may not be comparable to other similarly titled measures reported by other companies.
Union Drilling, Inc. (in thousands) Three Months Ended
March 31,
2007 2006
Calculation of drilling margin:
Operating income $14,960 $11,723
Depreciation and amortization 8,916 5,187
General and administrative 5,405 4,701 Drilling margin $29,281 $21,611 Revenue days during the period 4,344 4,324 Drilling margin per revenue day $6,741 $4,998
UDRL-E DATASOURCE: Union Drilling, Inc.
CONTACT: Christopher D. Strong, CEO, or A.J. Verdecchia, CFO, both of Union Drilling, Inc., +1-817-735-8793; or Ken Dennard, or Ben Burnham, both of DRG&E, +1-713-529-6600, for Union Drilling, Inc.
Web site: http://www.uniondrilling.com/
|