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FORT WORTH, Texas, Oct 30, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Union Drilling, Inc. (Nasdaq: UDRL) announced today financial and operating results for the quarter and nine months ended September 30, 2007.
Revenues for the third quarter of 2007 were $76.9 million, up 11% compared to revenues of $69.5 million in the third quarter of 2006. Net income in the third quarter of 2007 was $9.3 million, or $0.42 per diluted share, versus net income of $9.8 million, or $0.45 per diluted share, during the third quarter of 2006. EBITDA for the third quarter of 2007 was $26.3 million compared to $23.6 million reported in the same period last year. The moderate decrease in net income compared to an increase in EBITDA was primarily due to higher depreciation expenses associated with the addition of new rigs and equipment. 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, "The third quarter was solid as we produced record revenues, EBITDA and drilling margin per revenue day due to relatively good utilization and pricing in all three of our markets. After a strong summer, we are seeing some pullback in activity this fall, especially in the Arkoma Basin, and we expect some of this to continue during our seasonally slower fourth quarter."
Operating Statistics
The Company's average revenue per revenue day was $16,737 for the third quarter of 2007 compared to $14,683 for the third quarter of 2006. Revenue days totaled 4,597 days compared to 4,732 days for the same period last year. Drilling margins totaled $33.0 million, or 43% of revenues, for the third quarter of 2007 versus $28.6 million, or 41% of revenues, in the third quarter of 2006. Average drilling margin per revenue day during the third quarter totaled $7,188 in 2007 versus $6,054 in the prior year period. 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 70.4%, down from 79.0% in the same period last year.
Year-to-Date Results
For the nine months ended September 30, 2007, Union Drilling reported net income of $27.0 million, or $1.23 per diluted share, on revenues of $221.7 million, compared to net income of $23.2 million, or $1.08 per diluted share, on revenues of $184.9 million for the same period of 2006. This represents 20% year-to-date growth in total sales and 16% year-to-date growth in profit compared to 2006. EBITDA for the first nine months of 2007 was $75.8 million compared to $57.1 million reported in the same period last year.
Drilling margin for the first nine months increased to $93.7 million, or 42% of revenues, compared to $71.6 million, or 39% of revenues last year. The Company totaled 13,400 revenue days on 70.0% utilization for the first three quarters of 2007 versus 13,430 revenue days on 77.4% utilization for the same period in 2006. Revenue and drilling margin averaged $16,543 and $6,991 respectively per revenue day in the first nine months of 2007 compared to $13,766 and $5,330 during the same period in 2006.
Conference Call
Union Drilling's management team will be holding a conference call on Wednesday, October 31, 2007, at 9:30 a.m. eastern time. To participate in the call, dial (303) 262-2140 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 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 November 7, 2007 and may be accessed by calling (303) 590-3000 and using the pass code 11099486#. 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 and markets 71 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
Dennard / Ben Burnham
713-529-6600
Union Drilling, Inc.
Condensed Statements of Income
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues
Total revenues 76,938 69,482 221,670 184,877
Cost and expenses
Operating expenses 43,894 40,836 127,987 113,298
Depreciation and amortization 10,074 6,334 28,591 17,079
General and administrative 6,923 5,200 19,300 15,034
Total cost and expenses 60,891 52,370 175,878 145,411
Operating income 16,047 17,112 45,792 39,466
Interest expense (540) (212) (1,502) (213)
Gain (loss) on sale or
disposal of assets 173 (41) 1,075 282
Other income 48 152 295 279
Income before income taxes 15,728 17,011 45,660 39,814
Income tax expense 6,462 7,217 18,695 16,589
Net income $9,266 $9,794 $26,965 $23,225
Earnings per common share:
Basic $0.42 $0.46 $1.24 $1.09
Diluted $0.42 $0.45 $1.23 $1.08
Weighted-average common
shares outstanding:
Basic 21,974,884 21,337,507 21,765,640 21,239,735
Diluted 22,052,272 21,636,504 21,922,633 21,567,444
Union Drilling, Inc.
Operating Statistics
(in thousands, except day and per day data)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues $76,938 $69,482 $221,670 $184,877
Drilling margins $33,044 $28,646 $93,683 $71,579
Revenue days 4,597 4,732 13,400 13,430
Marketed rig utilization 70.4% 79.0% 70.0% 77.4%
Revenue per revenue day $16,737 $14,683 $16,543 $13,766
Drilling margin per revenue day $7,188 $6,054 $6,991 $5,330
Union Drilling, Inc.
Condensed Balance Sheets
(in thousands, except share and per share data)
September 30, December 31,
2007 2006
(unaudited)
Assets:
Current assets:
Cash and cash equivalents $20 $20
Accounts receivable (net of
allowance for doubtful accounts of
$763 and $839 at September 30, 2007
and December 31, 2006, respectively) 42,193 47,613
Inventories 1,552 1,073
Prepaid expenses and other assets 2,899 3,921
Assets held for sale - 2,144
Deferred taxes 5,146 4,686
Total current assets 51,810 59,457
Goodwill 7,909 7,909
Intangible assets (net of accumulated
amortization of $830 and $528 at
September 30, 2007 and December 31, 2006,
respectively) 2,170 2,472
Property, buildings and equipment (net
of accumulated depreciation of $95,622
and $69,338 at September 30, 2007 and
December 31, 2006, respectively) 219,104 187,084
Other assets 205 496
Total assets $281,198 $257,418
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $13,966 $17,018
Current portion of notes payable for
equipment 2,996 2,508
Other current obligations 538 2,333
Current portion of customer advances 4,859 1,613
Accrued expense and other liabilities 12,323 8,972
Total current liabilities 34,682 32,444
Revolving credit facility 12,211 27,810
Long-term notes payable for equipment 4,881 5,256
Deferred taxes 28,790 23,481
Customer advances and other long-term
liabilities 1,381 828
Total liabilities 81,945 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 September 30, 2007
and December 31, 2006, respectively 220 215
Additional paid in capital 141,370 136,686
Retained earnings 57,663 30,698
Total stockholders' equity 199,253 167,599
Total liabilities and stockholders' equity $281,198 $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 Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Calculation of EBITDA:
Net income $9,266 $9,794 $26,965 $23,225
Interest expense 540 212 1,502 213
Income tax expense 6,462 7,217 18,695 16,589
Depreciation and amortization 10,074 6,334 28,591 17,079
EBITDA $26,342 $23,557 $75,753 $57,106
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 day and per day data)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Calculation of drilling margin:
Operating income $16,047 $17,112 $45,792 $39,466
Depreciation and amortization 10,074 6,334 28,591 17,079
General and administrative 6,923 5,200 19,300 15,034
Drilling margin $33,044 $28,646 $93,683 $71,579
Revenue days 4,597 4,732 13,400 13,430
Drilling margin per revenue day $7,188 $6,054 $6,991 $5,330
UDRL-E
SOURCE Union Drilling, Inc.
http://www.uniondrilling.com
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