Company reports diluted EPS of $0.42 on revenues of $74.2 million
FT. WORTH, Texas, Aug. 1 /PRNewswire-FirstCall/ -- Union Drilling, Inc. (NASDAQ:UDRL) announced today financial and operating results for the quarter and six months ended June 30, 2007.
Revenues for the second quarter of 2007 were $74.2 million, up 26% compared to revenues of $58.8 million in the second quarter of 2006. Net income in the second quarter of 2007 was $9.2 million, or $0.42 per diluted share, versus net income of $6.5 million, or $0.30 per diluted share, during the second quarter of 2006. EBITDA for the second quarter of 2007 was $25.5 million compared to $16.5 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.
Christopher D. Strong, Union Drilling's President and Chief Executive Officer, commented, "We are very pleased with this quarter and the new records that we have achieved in revenues, margin, and EBITDA. We maintained consistent average dayrates across most of our fleet with only a slight decline in utilization compared to the first quarter. While repricing some of our rigs in the Barnett Shale resulted in moderately lower dayrates, this was more than offset by a full quarter's contribution from our three Ideal rigs that were delivered during the first quarter. Going forward, instability in the natural gas market is clearly a concern for our business, but so far in the third quarter, we have not seen a decline in drilling activity in our markets." Operating Statistics The Company's average revenue per revenue day was $16,641 for the second quarter of 2007 compared to $13,444 for the second quarter of 2006. Revenue days totaled 4,459 days compared to 4,375 days for the same period last year. Drilling margins totaled $31.4 million, or 42% of revenues, for the second quarter of 2007 versus $21.3 million, or 36% of revenues, in the second 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 second quarter was 69.0%, down from 76.1% in the same period last year.
Year-to-Date Results For the six months ended June 30, 2007, Union Drilling reported net income of $17.7 million, or $0.81 per diluted share, on revenues of $144.7 million, compared to net income of $13.4 million, or $0.62 per diluted share, on revenues of $115.4 million for the same period of 2006. This represents 25% year-to-date growth in total sales and 32% year-to-date growth in profit compared to 2006. EBITDA for the first half of 2007 was $49.4 million compared to $33.5 million reported in the same period last year.
Drilling margin for the first six months increased to $60.6 million, or 42% of revenues, compared to $42.9 million, or 37% of revenues last year. The Company totaled 8,803 revenue days on 69.8% utilization for the first half of 2007 versus 8,699 revenue days on 76.5% utilization for the first half of 2006. The year-over-year reduction in utilization was most pronounced in the Company's Arkoma Basin operations where low gas prices led to program curtailments by smaller operators. The Barnett Shale operations experienced some decline as well. New rig deliveries led to more intermittent demand for some of the Company's lower horsepower rigs in this market. Revenue and drilling margin averaged $16,441 and $6,888 respectively per revenue day in the first six months of 2007 compared to $13,265 and $4,935 during the same period in 2006.
Conference Call Union Drilling's management team will be holding a conference call on Thursday, August 2, 2007, at 11:00 a.m. eastern time. To participate in the call, dial (303) 262-2130 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 August 9, 2007 and may be accessed by calling (303) 590-3000 and using the pass code 11092919#. 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 71 marketed 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.
- Tables to follow - Union Drilling, Inc. Condensed Statements of Income
(in thousands, except per share data)
(Unaudited) Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues Total revenues 74,200 58,816 144,732 115,394 Cost and expenses
Drilling operations 42,842 37,494 84,093 72,462
Depreciation and amortization 9,601 5,557 18,517 10,744
General and administrative 6,972 5,134 12,377 9,834 Total cost and expenses 59,415 48,185 114,987 93,040 Operating income 14,785 10,631 29,745 22,354 Interest expense (540) - (962) (1)
Gain on sale of assets 929 242 902 323
Other income 212 90 247 127 Income before income taxes 15,386 10,963 29,932 22,803 Income tax expense 6,187 4,503 12,233 9,372 Net income $9,199 $6,460 $17,699 $13,431
Earnings per common share:
Basic $0.42 $0.30 $0.82 $0.63
Diluted $0.42 $0.30 $0.81 $0.62 Weighted-average common
shares outstanding:
Basic 21,783,478 21,213,705 21,659,283 21,190,038
Diluted 21,965,189 21,611,700 21,859,451 21,585,427 Union Drilling, Inc. Operating Statistics
(in thousands, except per day data) Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006 Revenues $74,200 $58,816 $144,732 $115,394
Drilling margins $31,358 $21,322 $ 60,639 $ 42,932 Revenue days 4,459 4,375 8,803 8,699
Marketed rig utilization 69.0% 76.1% 69.8% 76.5% Revenue per revenue day $16,641 $13,444 $ 16,441 $ 13,265 Drilling margin per revenue day $ 7,033 $ 4,874 $ 6,888 $ 4,935 Union Drilling, Inc. Condensed Balance Sheets
(in thousands, except share and per share data) June 30, December 31,
2007 2006
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $ 20 $ 20
Accounts receivable (net of
allowance for doubtful accounts of
$1,999 and $839 at June 30, 2007 and
December 31, 2006, respectively) 42,123 47,613
Inventories 1,508 1,073
Prepaid expenses and other assets 4,001 3,921
Assets held for sale 1,729 2,144
Deferred taxes 5,095 4,686 Total current assets 54,476 59,457
Goodwill 7,909 7,909
Intangible assets (net of accumulated
amortization of $730 and $528 at
June 30, 2007 and December 31, 2006,
respectively) 2,270 2,472
Property, buildings and equipment (net
of accumulated depreciation of
$86,119 and $69,338 at June 30, 2007
and December 31, 2006, respectively) 217,341 187,084
Other assets 308 496 Total assets $282,304 $257,418 Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 11,063 $ 17,018
Current portion of long-term obligations 2,790 2,508
Other current obligations 1,287 2,333
Current portion of advances from customers 4,759 1,613
Accrued expense and other liabilities 9,753 8,972 Total current liabilities 29,652 32,444
Revolving credit facility 28,660 27,810
Long-term obligations 4,960 5,256
Deferred taxes 27,001 23,481
Other long-term liabilities 2,141 828 Total liabilities 92,414 89,819 Stockholders' equity:
Common stock, par value $.01 per share;
75,000,000 shares authorized;
21,974,884 and 21,523,577 shares issued
and outstanding at June 30, 2007 and
December 31, 2006, respectively 220 215
Additional paid in capital 141,273 136,686
Retained earnings 48,397 30,698 Total stockholders' equity 189,890 167,599 Total liabilities and stockholders' equity $282,304 $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 Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Calculation of EBITDA:
Net income $ 9,199 $ 6,460 $17,699 $13,431
Interest expense 540 - 962 1
Income tax expense 6,187 4,503 12,233 9,372
Depreciation and amortization 9,601 5,557 18,517 10,744
EBITDA $25,527 $16,520 $49,411 $33,548 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, except per day data) Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Calculation of drilling margin:
Operating income $14,785 $10,631 $29,745 $22,354
Depreciation and amortization 9,601 5,557 18,517 10,744
General and administrative 6,972 5,134 12,377 9,834 Drilling margin $31,358 $21,322 $60,639 $42,932 Revenue days during the period 4,459 4,375 8,803 8,699 Drilling margin per revenue day $ 7,033 $ 4,874 $ 6,888 $ 4,935
Contacts: Union Drilling, Inc. Christopher D. Strong, CEO
A.J. Verdecchia, CFO
817-735-8793 DRG&E
Ken Dennard / Ben Burnham
713-529-6600
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/
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