Union Drilling Reports 2012 Second Quarter Results

FORT WORTH, Texas, Aug. 1, 2012 /PRNewswire/ -- Union Drilling, Inc. (NASDAQ: UDRL) announced today financial and operating results for the three month period ended June 30, 2012.

Revenues for the second quarter of 2012 were $68.1 million compared to $59.9 million in the second quarter of 2011.  The Company reported net income of $0.6 million for the quarter, or $0.03 per share, compared to a net loss of $3.4 million, or $0.15 per share, during the prior year period.

EBITDA for the second quarter of 2012 totaled $13.3 million compared to $9.1 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.

Christopher D. Strong, Union Drilling's President and Chief Executive Officer, stated, "The improvement in financial results this quarter was driven primarily by higher average dayrates.  While construction of our two new 1,500 horsepower electric rigs for Arkoma was delayed, those rigs are expected to enter service this month and the third rig for Appalachia is now projected to enter service early in the fourth quarter.

"For the remainder of 2012, we are seeing moderate weakness in certain markets, but activity remains fairly stable.  Our strong term contract coverage should mitigate some of the impact from any short-term slowdown.  In total, we currently have 37 of our 50 rigs working as of today, with 31 of those on term contracts."

Operating Statistics

Union Drilling's average marketed rig utilization for the second quarter of 2012 was 78.1%, up from 54.4% in the second quarter of 2011 ("year-over-year"), and 77.8% in the first quarter of 2012 ("sequential").  Pro forma utilization for the second quarter of 2011, which excludes rigs that have subsequently been divested, was 71.6%.  Revenue days totaled 3,554, up 1% year-over-year and flat sequentially.

Average revenue per revenue day was $19,160, up 12% year-over-year and 5% sequentially.  Operating expenses per revenue day for the second quarter of 2012 were $13,503 per revenue day, up 8% year-over-year and flat sequentially.

Drilling margins totaled $20.1 million, or 30% of revenues, compared year-over-year to 27% of revenues, and compared sequentially to 26% of revenues.  Average drilling margin per revenue day totaled $5,657 for the second quarter of 2012, up 24% year-over-year, and 19% 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.

Year-to-Date Results

For the six months ended June 30, 2012, Union Drilling reported a net loss of $1.6 million, or $0.07 per share, on revenues of $132.7 million, compared to a net loss of $8.0 million, or $0.35 per share, on revenues of $115.9 million for the first six months of 2011.  Year-to-date EBITDA increased to $23.1 million compared to $15.5 million in the comparable period of 2011.

Drilling margin for the first six months of 2012 totaled $36.9 million, or 28% of revenues, compared to $29.4 million, or 25% of revenues, in the prior year period.  The Company totaled 7,094 revenue days on 77.7% utilization for the first half of 2012 versus 6,979 revenue days on 54.3% utilization last year.  Revenue and drilling margin averaged $18,708 and $5,207 , respectively, per revenue day in the first six months of 2012 compared to $16,610 and $4,217 in the comparable period in 2011.

Conference Call

Union Drilling's management team will hold a conference call on Thursday, August 2, 2012, at 10:00 a.m. Eastern time.  To participate in the call, dial 480-629-9723 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 August 9, 2012 and may be accessed by calling (303) 590-3030 and using the pass code 4552557.  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.

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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.

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.

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.

SOURCE Union Drilling, Inc.