Union Drilling Reports 2012 First Quarter Results
FORT WORTH, Texas, May 2, 2012 /PRNewswire/ -- Union Drilling, Inc. (NASDAQ: UDRL) announced today financial and operating results for the three month period ended March 31, 2012.
Revenues for the first quarter of 2012 were $64.6 million compared to $56.0 million in the first quarter of 2011. The Company reported a net loss of $2.2 million for the quarter, or $0.10 per share, compared to a net loss of $4.6 million, or $0.20 per share, during the prior year period.
EBITDA for the first quarter of 2012 totaled $9.8 million compared to $6.4 million reported in the same period last year. For additional information regarding EBITDA and as a non-GAAP financial measure, please refer to the disclosures contained at the end of this release.
During the quarter, Union Drilling repurchased approximately 1.0 million shares of its common stock at an average price of $5.53 per share, including commissions. As of March 31, 2012, the Company had cumulatively repurchased 1.1 million shares since the authorization of its 3.0 million share repurchase program in October 2011.
Christopher D. Strong, Union Drilling's President and Chief Executive Officer, stated, "Although we anticipated some weakness in the first quarter due to seasonal issues and the shifting of rigs to oil and liquids plays, the financial results were more significantly impacted than we expected. Several rigs were idle for two or three months of the quarter as they transitioned between jobs, and we continued to incur expenses during those periods. In addition we're seeing more cost inflation across the fleet, especially for labor.
"Several – but not all – of the transitioning rigs are back to work today, and dayrates are continuing to trend upwards, though at a modest pace. We took delivery of one newbuild early in the second quarter and expect to have two more before the second quarter ends. In total, we currently have 41 of our 50 rigs working as of today."
Operating Statistics
Union Drilling's average marketed rig utilization for the first quarter of 2012 was 77.8%, up from 54.2% in the first quarter of 2011 ("year-over-year"), and down from 84.2% in the fourth quarter of 2011 ("sequential"). Pro forma utilization for the first quarter of 2011, which excludes rigs that have subsequently been divested, was 70.0%. The sequential decline in utilization was due to several rigs experiencing downtime after term contracts ended. Revenue days totaled 3,540, up 2% year-over-year and down 10% sequentially.
Average revenue per revenue day was $18,254, up 13% year-over-year and 5% sequentially. Operating expenses per revenue day for the first quarter of 2012 were $13,499 per revenue day, up 10% year-over-year and 12% sequentially. The increase in operating expense per revenue day was primarily due to completing repairs and recertifications as well as retaining crews on rigs that were between contracts.
Drilling margins totaled $16.8 million, or 26% of revenues, compared year-over-year to 24% of revenues, and compared sequentially to 31% of revenues. Average drilling margin per revenue day totaled $4,755 for the first quarter of 2012, up 23% year-over-year, and down 12% sequentially. For additional information regarding drilling margin as a non-GAAP financial measure, please refer to the disclosures contained at the end of this release.
Conference Call
Union Drilling's management team will hold a conference call on Thursday, May 3, 2012, at 10:00 a.m. Eastern time. To participate in the call, dial 480-629-9645 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 website 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 10, 2012 and may be accessed by calling (303) 590-3030 and using the pass code 4530427. 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 www.uniondrilling.com.
About Union Drilling
Union Drilling, Inc., headquartered in Fort Worth, Texas, provides contract land drilling services and equipment to oil and natural gas producers in the United States. Union Drilling currently markets 50 rigs and specializes in unconventional drilling techniques.
UDRL-E
Statements we make in this press release that express a belief, expectation or intention, as well as those which are not historical fact, are forward-looking statements within the meaning of the federal securities laws and are subject to risks, uncertainties and assumptions. These forward-looking statements may be identified by the use of words such as "expect," "anticipate," "believe," "estimate," "potential," "should" or similar words. These matters include statements concerning management's plans and objectives relating to our operations or economic performance and related assumptions, including general economic and business conditions and industry trends, the continued strength or weakness of the contract land drilling industry in the geographic areas in which we operate, decisions about onshore exploration and development projects to be made by oil and gas companies, the highly competitive nature of our business, our future financial performance, including availability, terms and deployment of capital, the continued availability of qualified personnel, and changes in, or our failure or inability to comply with, government regulations, including those relating to workplace safety and the environment. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Further, we specifically disclaim any duty to update any of the information set forth in this press release, including any forward-looking statements. Forward-looking statements are made based on management's current expectations and beliefs concerning future events and, therefore, involve a number of assumptions, risks and uncertainties, including the risk factors described in our public filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. Management cautions that forward-looking statements are not guarantees, and our actual results could differ materially from those expressed or implied in the forward-looking statements.
Contacts: | Union Drilling, Inc. |
Christopher D. Strong, CEO | |
Tina Castillo, CFO | |
817-735-8793 | |
DRG&L | |
Ken Dennard / Ben Burnham | |
713-529-6600 |
Union Drilling, Inc. | ||||
Statements of Operations | ||||
(in thousands, except share and per share data) | ||||
(unaudited) | ||||
Three Months Ended | ||||
March 31, | ||||
2012 | 2011 | |||
Revenues | ||||
Total revenues | $ 64,620 | $ 55,995 | ||
Cost and expenses | ||||
Operating expenses | 47,788 | 42,575 | ||
Depreciation and amortization | 12,217 | 12,608 | ||
General and administrative | 7,512 | 7,253 | ||
Total cost and expenses | 67,517 | 62,436 | ||
Operating loss | (2,897) | (6,441) | ||
Interest expense | (450) | (387) | ||
Gain on disposal of assets | 320 | 196 | ||
Other income | 175 | 86 | ||
Loss before income taxes | (2,852) | (6,546) | ||
Income tax benefit | (638) | (1,949) | ||
Net loss | $ (2,214) | $ (4,597) | ||
Loss per common share: | ||||
Basic | $ (0.10) | $ (0.20) | ||
Diluted | $ (0.10) | $ (0.20) | ||
Weighted-average common shares outstanding: | ||||
Basic | 23,114,046 | 23,183,628 | ||
Diluted | 23,114,046 | 23,183,628 | ||
Union Drilling, Inc. | |||
Operating Statistics | |||
(in thousands, except day and per day data) | |||
Three Months Ended | |||
March 31, | |||
2012 | 2011 | ||
Revenues | $ 64,620 | $ 55,995 | |
Operating expenses | $ 47,788 | $ 42,575 | |
Drilling margins | $ 16,832 | $ 13,420 | |
Revenue days | 3,540 | 3,463 | |
Marketed rig utilization | 77.8% | 54.2% | |
Revenue per revenue day | $ 18,254 | $ 16,170 | |
Operating expenses per revenue day | $ 13,499 | $ 12,295 | |
Drilling margin per revenue day | $ 4,755 | $ 3,875 | |
Union Drilling, Inc. | |||||
Condensed Balance Sheets | |||||
(in thousands, except share data) | |||||
March 31, | December 31, | ||||
2012 | 2011 | ||||
(unaudited) | |||||
Assets: | |||||
Current assets: | |||||
Cash and cash equivalents | $ 7 | $ 7 | |||
Accounts receivable (net of allowance for doubtful accounts of $1,270 and | |||||
$1,409 at March 31, 2012 and December 31, 2011, respectively) | 41,350 | 45,387 | |||
Inventories | 782 | 832 | |||
Income tax recoverable | 302 | 368 | |||
Prepaid expenses, deposits and other receivables | 1,990 | 3,027 | |||
Deferred taxes | 1,239 | 1,239 | |||
Total current assets | 45,670 | 50,860 | |||
Intangible assets (net of accumulated amortization of $1,296 and | |||||
$1,221 at March 31, 2012 and December 31, 2011, respectively) | 904 | 979 | |||
Property, buildings and equipment (net of accumulated depreciation of | |||||
$222,561 and $212,173 at March 31, 2012 and | |||||
December 31, 2011, respectively) | 296,399 | 289,429 | |||
Other assets | 686 | 743 | |||
Total assets | $ 343,659 | $ 342,011 | |||
Liabilities and Stockholders' Equity: | |||||
Current liabilities: | |||||
Accounts payable | $ 19,229 | $ 21,513 | |||
Current portion of notes payable for equipment | 287 | 120 | |||
Financed insurance premiums | 771 | 1,057 | |||
Accrued expenses and other liabilities | 9,252 | 10,811 | |||
Total current liabilities | 29,539 | 33,501 | |||
Revolving credit facility | 81,551 | 67,813 | |||
Long-term notes payable for equipment | 123 | 70 | |||
Deferred taxes | 42,404 | 42,972 | |||
Total liabilities | 153,617 | 144,356 | |||
Stockholders' equity: | |||||
Common stock, par value $.01 per share; 75,000,000 shares | |||||
authorized; and 25,228,816 shares issued | |||||
both at March 31, 2012 and December 31, 2011 | 252 | 252 | |||
Additional paid in capital | 172,781 | 172,465 | |||
Retained earnings | 33,614 | 35,828 | |||
Treasury stock; 3,114,291 and 2,080,700 shares at March 31, 2012 | |||||
and December 31, 2011, respectively | (16,605) | (10,890) | |||
Total stockholders' equity | 190,042 | 197,655 | |||
Total liabilities and stockholders' equity | $ 343,659 | $ 342,011 | |||
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 it is used by external users, such as investors, commercial banks, research analysts and others, to assess: (1) the financial performance of Union Drilling's assets without regard to financing methods, capital structure or historical cost basis, (2) the ability of Union Drilling's assets to generate cash sufficient to pay interest costs and support its indebtedness, and (3) Union Drilling's operating performance and return on capital as compared to those of other entities in our industry, without regard to financing or capital structure. 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 loss 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, | |||||
2012 | 2011 | ||||
Calculation of EBITDA: | |||||
Net loss | $ (2,214) | $ (4,597) | |||
Interest expense | 450 | 387 | |||
Income tax benefit | (638) | (1,949) | |||
Depreciation and amortization | 12,217 | 12,608 | |||
EBITDA | $ 9,815 | $ 6,449 | |||
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 | ||||
March 31, | ||||
2012 | 2011 | |||
Calculation of drilling margin: | ||||
Operating loss | $ (2,897) | $ (6,441) | ||
Depreciation and amortization | 12,217 | 12,608 | ||
General and administrative | 7,512 | 7,253 | ||
$ 16,832 | $ 13,420 | |||
Revenue days | 3,540 | 3,463 | ||
Drilling margin per revenue day | $ 4,755 | $ 3,875 | ||
SOURCE Union Drilling, Inc.
