Pioneer Energy Services Reports Fourth Quarter 2018 Results

SAN ANTONIO, Feb. 19, 2019 /PRNewswire/ -- Pioneer Energy Services (NYSE: PES) today reported financial and operating results for the quarter ended December 31, 2018. Fourth quarter and recent notable items include:

    --  Domestic drilling fleet was fully utilized and generated an average
        margin per day of $10,252.
    --  International drilling fleet generated its highest average margin per
        day since 2014. Also, two drilling rigs that had been idle during the
        quarter commenced operations in December for two separate clients
        resulting in seven rigs earning revenue at year-end.
    --  Well servicing and coiled tubing both generated sequential revenue
        increases despite seasonal activity slowdowns and lower commodity
        prices.

Consolidated Financial Results

Revenues for the fourth quarter of 2018 were $141.5 million, down 5% from revenues of $149.3 million in the third quarter of 2018 ("the prior quarter"). Net loss for the fourth quarter of 2018 was $14.5 million, or $0.19 per share, compared with net loss of $5.2 million, or $0.07 per share, in the prior quarter. Adjusted net loss((1)) for the fourth quarter was $13.6 million, and adjusted EPS((2)) was a loss of $0.17 per share. These results compare to an adjusted net loss of $5.6 million, and an adjusted EPS loss of $0.07 per share in the prior quarter. Fourth quarter adjusted EBITDA((3)) was $20.8 million, down from $28.6 million in the prior quarter.

The decrease in revenues and adjusted EBITDA from the prior quarter was primarily due to lower completion-related activity in our wireline services business, which was partially offset by improved margins in our international drilling operations. Additionally, our adjusted EBITDA during the fourth quarter decreased by $1.0 million as compared to the prior quarter due to the change in fair value of our phantom stock awards, for which we recognized a benefit in the third and fourth quarters of $3.7 million and $2.7 million, respectively.

Operating Results

Production Services Business

Revenue from our production services business was $82.3 million in the fourth quarter, down 8% from the prior quarter. Gross margin as a percentage of revenue from our production services business was 19% in the fourth quarter, down from 24% in the prior quarter.

The decrease in production services revenues from the prior quarter was attributable to lower wireline completion-related activity as certain customers curtailed completion activities amidst declining commodity prices. The overall decrease in production service revenue was partially offset by sequential increases in well servicing and coiled tubing revenues. We continued to expand our 24-hour drill-out, completion-related activity, primarily in West Texas, which led to a sequential increase in revenue for the well servicing business. Our coiled tubing business benefited from the full impact of large diameter equipment added during the prior quarter.

Well servicing average revenue per hour was $571 in the fourth quarter, up from $552 in the prior quarter. Well servicing rig utilization was 50% in the fourth quarter, down slightly from 51% in the prior quarter. Coiled tubing revenue days totaled 346 in the fourth quarter, as compared to 362 in the prior quarter. The number of wireline jobs completed in the fourth quarter decreased by 10% sequentially.

Drilling Services Business

Revenue from our drilling services business was $59.2 million in the fourth quarter, reflecting a 1% decrease from the prior quarter. Margin per day was $10,872, up from $9,428 in the prior quarter.

Our domestic drilling fleet was fully utilized during the current and prior quarters with average revenues per day of $25,794 in the fourth quarter, up from $25,076 in the prior quarter. Domestic drilling average margin per day was $10,252 in the fourth quarter, up slightly from $10,237 in the prior quarter due to certain rigs repricing upward by approximately $1,000 to $4,000 per day during the quarter, but offset by one rig repricing downward by approximately $5,000 per day from a legacy contract.

International drilling rig utilization was 71% for the fourth quarter, down from 76% in the prior quarter. Average revenues per day were $41,230, up from $41,158 in the prior quarter, while average margin per day for the fourth quarter was $12,590, up from $7,327 in the prior quarter. The increase in revenue per day and margin per day was primarily due to negotiated reimbursements of certain operating costs of approximately $1.3 million, as well as demobilization revenue related to one contract. Although utilization in the fourth quarter was down sequentially, two idle rigs were mobilized and began operations in December.

Currently, all 16 of our domestic drilling rigs are earning revenues, 13 of which are under term contracts, and six of our eight rigs in Colombia are earning revenue under daywork contracts. In our domestic drilling operations, we expect our contracted new-build drilling rig to be deployed to West Texas and begin operations in late first quarter of 2019.

Comments from our President and CEO

"In 2018, we generated significantly improved results over 2017 with our drilling services business achieving 35% revenue growth and a 42% increase in gross margin, while our production services business achieved 31% revenue growth and a 35% increase in gross margin," said Wm. Stacy Locke, President and Chief Executive Officer. "Strong demand for our U.S. drilling services positioned us to continue to generate industry-leading margins throughout the year, despite the downward repricing of four rigs from legacy new-build contracts. Our fleet of top performing U.S. drilling rigs remains fully utilized, and continues to experience strong demand. In Colombia, we diversified our client base and finished 2018 with seven rigs earning revenue for five customers. Our international drilling operations had a particularly favorable year with 104% revenue growth and a 115% improvement in gross margin.

"Looking forward, we have solid term contract protection in our drilling services business, and select dayrate increases that were negotiated in the fourth quarter will positively impact the business in 2019. We expect drilling demand for high spec rigs to remain strong, particularly in West Texas where we will be delivering a new-build rig in the first quarter on a three-year term contract. Demand has been firm in Colombia with seven rigs currently contracted, although one of the seven will not be earning revenue for part of the first quarter due to a required mast repair, but is expected to return to work in the second quarter.

"Our production services business should see steady improvement throughout the first quarter with typical seasonal weakness in January and February, and finishing stronger in March. We expect to continue to benefit from our investment in coiled tubing with the addition of two large diameter units in 2018 and the ongoing expansion of 24-hour drill-out, completion activities that we introduced in late 2018 in our well servicing business. We anticipate that market dynamics for wireline services could remain challenging in early 2019.

"While the market conditions remain uncertain and visibility limited, we are focused on maintaining capital expenditure discipline with an expectation of being cash flow neutral for 2019. In addition, we will continue to explore asset sales to unlock additional liquidity and enhance our ability to reduce debt."

First Quarter 2019 Guidance

In the first quarter of 2019, revenue from our production services business segments could range from down 3% to up 3% as compared to the fourth quarter of 2018 depending on a number of factors such as weather and the timing of certain clients resuming operations. Margin from our production services business is estimated to be 18% to 21% of revenue. Domestic drilling services rig utilization is expected to be 100% and generate average margins per day of approximately $9,700 to $10,200. International drilling services rig utilization is estimated to average 80% to 83%, and generate average margins per day of approximately $9,000 to $10,000.

We expect general and administrative expense to be approximately $20 million to $21 million in the first quarter of 2019, which as it relates to phantom stock compensation expense, is based on the closing price of our common stock of $1.23 per share at December 31, 2018.

Liquidity

Working capital at December 31, 2018 was $110.3 million, down from $130.6 million at December 31, 2017. Cash and cash equivalents, including restricted cash, were $54.6 million, down from $75.6 million at year-end 2017. During the year ended December 31, 2018, we used $67.1 million of cash for the purchase of property and equipment, and our cash provided by operations was $39.7 million.

Capital Expenditures

Cash capital expenditures during the year ended December 31, 2018 were $67.1 million, including capitalized interest. We estimate total cash capital expenditures for 2019 to be approximately $55 million to $60 million, which includes approximately $7 million for final payments on the construction of the new-build drilling rig that is expected to begin operations in the first quarter, and previous commitments on high-pressure pump packages for coiled tubing completion operations.

Conference Call

Pioneer Energy Services' management team will hold a conference call today at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss these results. To participate, dial (412) 902-0003 approximately 10 minutes prior to the call and ask for the Pioneer Energy Services conference call. A telephone replay will be available after the call until February 26(th). To access the replay, dial (201) 612-7415 and enter the pass code 13686777.

The conference call will also be webcast on the Internet and accessible from Pioneer Energy Services' web site at www.pioneeres.com. To listen to the live call, visit our web site at least 10 minutes early to register and download any necessary audio software. For more information, please contact Donna Washburn at Dennard Lascar Investor Relations at (713) 529-6600 or e-mail dwashburn@dennardlascar.com.

About Pioneer

Pioneer Energy Services provides well servicing, wireline, and coiled tubing services to producers in the U.S. Gulf Coast, Mid-Continent and Rocky Mountain regions through its three production services business segments. Pioneer also provides contract land drilling services to oil and gas operators in Texas, the Mid-Continent and Appalachian regions and internationally in Colombia through its two drilling services business segments.

Cautionary Statement Regarding Forward-Looking Statements,
Non-GAAP Financial Measures and Reconciliations

Statements we make in this news release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements made in good faith that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including general economic and business conditions and industry trends, levels and volatility of oil and gas prices, the continued demand for drilling services or production services in the geographic areas where we operate, decisions about exploration and development projects to be made by oil and gas exploration and production companies, the highly competitive nature of our business, technological advancements and trends in our industry and improvements in our competitors' equipment, the loss of one or more of our major clients or a decrease in their demand for our services, future compliance with covenants under debt agreements, including our senior secured term loan, our senior secured revolving asset-based credit facility, and our senior notes, operating hazards inherent in our operations, the supply of marketable drilling rigs, well servicing rigs, coiled tubing units and wireline units within the industry, the continued availability of new components for drilling rigs, well servicing rigs, coiled tubing units and wireline units, the continued availability of qualified personnel, the success or failure of our acquisition strategy, the occurrence of cybersecurity incidents, the political, economic, regulatory and other uncertainties encountered by our operations, and changes in, or our failure or inability to comply with, governmental regulations, including those relating to the environment. We have discussed many of these factors in more detail in our Annual Report on Form 10-K for the year ended December 31, 2018, including under the headings "Special Note Regarding Forward-Looking Statements" in the Introductory Note to Part I and "Risk Factors" in Item 1A. These factors are not necessarily all the important factors that could affect us. Other unpredictable or unknown factors could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. All forward-looking statements speak only as of the date on which they are made and we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. We advise our shareholders that they should (1) recognize that important factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements.

This news release contains non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided in the following tables.



     _________________________________





     
              (1)                    Adjusted net loss represents net loss as reported adjusted to exclude
                                          impairments and the related tax benefit and valuation allowance adjustments
                                          on deferred tax assets. We believe that adjusted net loss is a useful measure
                                          to facilitate period-to-period comparisons of our core operating
                                          performance and to evaluate our long-term financial performance against that
                                          of our peers, although it is not a measure of financial performance under
                                          GAAP. Adjusted net loss may not be comparable to other similarly titled
                                          measures reported by other companies. A reconciliation of net loss as
                                          reported to adjusted net loss is included in the tables to this news release.





     
              (2)                    Adjusted (diluted) EPS represents adjusted net loss divided by the weighted-
                                          average number of shares outstanding during the period, including the effect
                                          of dilutive securities, if any. We believe that adjusted (diluted) EPS is a
                                          useful measure to facilitate period-to-period comparisons of our core
                                          operating performance and to evaluate our long-term financial performance
                                          against that of our peers, although it is not a measure of financial
                                          performance under GAAP. Adjusted (diluted) EPS may not be comparable to
                                          other similarly titled measures reported by other companies. A
                                          reconciliation of diluted EPS as reported to adjusted (diluted) EPS is
                                          included in the tables to this news release.





     
              (3)                    Adjusted EBITDA represents income (loss) before interest expense, income tax
                                          (expense) benefit, depreciation and amortization, impairment, and loss on
                                          extinguishment of debt. Adjusted EBITDA is a non-GAAP measure that our
                                          management uses to facilitate period-to-period comparisons of our core
                                          operating performance and to evaluate our long-term financial performance
                                          against that of our peers. We believe that this measure is useful to
                                          investors and analysts in allowing for greater transparency of our core
                                          operating performance and makes it easier to compare our results with those
                                          of other companies within our industry. Adjusted EBITDA should not be
                                          considered (a) in isolation of, or as a substitute for, net income (loss),
                                          (b) as an indication of cash flows from operating activities or (c) as a
                                          measure of liquidity. In addition, Adjusted EBITDA does not represent funds
                                          available for discretionary use. Adjusted EBITDA may not be comparable to
                                          other similarly titled measures reported by other companies.  A
                                          reconciliation of net loss as reported to adjusted EBITDA is included in the
                                          tables to this news release.


     Contacts: 
     Dan Petro, CFA, Vice President, Treasury and


               
     Investor Relations


               
     Pioneer Energy Services Corp.


               
     (210) 828-7689




               
     Lisa Elliott / pes@dennardlascar.com



                 Dennard Lascar Investor Relations /(713) 529-6600

- Financial Statements and Operating Information Follow -


                                                            
              
           PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                 
             
            Consolidated Statements of Operations


                                                                       
         (in thousands, except per share data)




                                                        Three months ended                                  
              
                Year ended



                                        December 31,                                            September 30,                      
              
           December 31,



                                                2018                                  2018                                2018                   2017

                                                                                                                                               ---

                                           
             (unaudited)                                                    
              (audited)





     Revenues                                         $
              141,505                                  $
              149,332                                   $
        590,097      $
         446,455






     Costs and expenses:


      Operating costs                        103,989                                 108,961                                         429,913                             330,880



     Depreciation                            23,019                                  23,501                                          93,554                              98,777


      General and
       administrative                         16,051                                  14,043                                          74,117                              69,681


      Bad debt expense, net of
       recovery                                  582                                     111                                             271                                  53



     Impairment                               1,815                                     239                                           4,422                               1,902


      Gain on dispositions of
       property and equipment,
       net                                     (199)                                (1,861)                                         (3,121)                            (3,608)


      Total costs and expenses               145,257                                 144,994                                         599,156                             497,685



      Income (loss) from
       operations                            (3,752)                                  4,338                                         (9,059)                           (51,230)






     Other income (expense):


      Interest expense, net of
       interest capitalized                  (9,816)                                (9,811)                                        (38,782)                           (27,039)


      Other income (expense),
       net                                     (308)                                    498                                             738                                 424



      Total other expense, net              (10,124)                                (9,313)                                        (38,044)                           (28,091)





      Loss before income taxes              (13,876)                                (4,975)                                        (47,103)                           (79,321)


      Income tax (expense)
       benefit                                 (611)                                  (258)                                        (1,908)                              4,203



     Net loss                                        $
              (14,487)                                 $
              (5,233)                                 $
        (49,011)    $
         (75,118)






     Loss per common share:



     Basic                                             $
              (0.19)                                  $
              (0.07)                                   $
        (0.63)      $
         (0.97)




     Diluted                                           $
              (0.19)                                  $
              (0.07)                                   $
        (0.63)      $
         (0.97)





      Weighted-average number of shares
       outstanding:



     Basic                                   78,136                                  78,136                                          77,957                              77,390




     Diluted                                 78,136                                  78,136                                          77,957                              77,390


                                                                          
       
        PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                            
       
           Condensed Consolidated Balance Sheets


                                                                                  
              (in thousands)


                                                                                    
              (audited)




                                                                                                                                  December 31,                     December 31,
                                                                                                                                          2018              2017

                                                                                                                                                            ---




       
                ASSETS

    ---


       Current assets:



       Cash and cash equivalents                                                                                                               $
      53,566                  $
       73,640



       Restricted cash                                                                                                                    998               2,008



       Receivables, net of allowance for doubtful accounts                                                                            130,881             113,005



       Inventory                                                                                                                       18,898              14,057



       Assets held for sale                                                                                                             3,582               6,620



       Prepaid expenses and other current assets                                                                                        7,109               6,229



       Total current assets                                                                                                           215,034             215,559





       Net property and equipment                                                                                                     524,858             549,623



       Other noncurrent assets                                                                                                          1,658               1,687



       Total assets                                                                                                                           $
      741,550                 $
       766,869






       
                LIABILITIES AND SHAREHOLDERS' EQUITY

    ---


       Current liabilities:



       Accounts payable                                                                                                                        $
      34,134                  $
       29,538



       Deferred revenues                                                                                                                1,722                 905



       Accrued expenses                                                                                                                68,912              54,471



       Total current liabilities                                                                                                      104,768              84,914





       Long-term debt, less unamortized discount and debt issuance costs                                                              464,552             461,665



       Deferred income taxes                                                                                                            3,688               3,151



       Other noncurrent liabilities                                                                                                     3,484               7,043



       Total liabilities                                                                                                              576,492             556,773



       Total shareholders' equity                                                                                                     165,058             210,096




       Total liabilities and shareholders' equity                                                                                             $
      741,550                 $
       766,869


                         
              
                PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                        
              
                Condensed Consolidated Statements of Cash Flows


                                               
              (in thousands)


                                                  
              (audited)




                                                    
              
                Year ended


                                                    
              
                December 31,


                                                  2018                                          2017

                                                                                                ---




     Cash flows from operating activities:



     Net loss                                           $
              (49,011)                          $
        (75,118)


      Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities:



     Depreciation                              93,554                                          98,777


      Allowance for doubtful
       accounts, net of recoveries                 271                                              53


      Gain on dispositions of
       property and equipment, net             (3,121)                                        (3,608)


      Stock-based compensation
       expense                                   4,444                                           4,349


      Phantom stock compensation
       expense                                      46                                           1,609


      Amortization of debt issuance
       costs and discount                        2,900                                           1,548


      Loss on extinguishment of debt                 -                                          1,476



     Impairment                                 4,422                                           1,902


      Deferred income taxes                        538                                         (5,030)


      Change in other noncurrent
       assets                                      565                                             (1)


      Change in other noncurrent
       liabilities                               (426)                                            385


      Changes in current assets and
       liabilities                            (14,526)                                       (32,159)



      Net cash provided by (used in)
       operating activities                     39,656                                         (5,817)






     Cash flows from investing activities:


      Purchases of property and
       equipment                              (67,148)                                       (63,277)


      Proceeds from sale of property
       and equipment                             5,864                                          12,569


      Proceeds from insurance
       recoveries                                1,082                                           3,344



      Net cash used in investing
       activities                             (60,202)                                       (47,364)






     Cash flows from financing activities:



     Debt repayments                                -                                      (120,000)


      Proceeds from issuance of debt                 -                                        245,500



     Debt issuance costs                            -                                        (6,332)


      Proceeds from exercise of
       options                                      11


      Purchase of treasury stock                 (549)                                          (533)


      Net cash provided by (used in)
       financing activities                      (538)                                        118,635





      Net decrease in cash, cash
       equivalents and restricted
       cash                                   (21,084)                                         65,454


      Beginning cash, cash
       equivalents and restricted
       cash                                     75,648                                          10,194



      Ending cash, cash equivalents
       and restricted cash                                 $
              54,564                             $
        75,648


                                                   
              
              PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                            
             
               Operating Results by Segment


                                                                        
              (in thousands)


                                                                         
              (unaudited)




                                                   Three months ended                                     
              
             Year ended



                                    December 31,                                              September 30,                   
              
           December 31,



                                            2018                                    2018                                2018                2017

                                                                                                                                          ---


     
                Revenues:



     Domestic drilling                            $
              37,530                                      $
              36,586                                $
         145,676     $
          129,276



     International drilling              21,646                                    23,131                                       84,161                               41,349




     Drilling services                   59,176                                    59,717                                      229,837                              170,625




     Well servicing                      25,155                                    24,369                                       93,800                               77,257



     Wireline services                   44,466                                    52,654                                      215,858                              163,716



     Coiled tubing services              12,708                                    12,592                                       50,602                               34,857




     Production services                 82,329                                    89,615                                      360,260                              275,830




     Consolidated revenues                       $
              141,505                                     $
              149,332                                $
         590,097     $
          446,455






     
                Operating costs:



     Domestic drilling                            $
              22,613                                      $
              21,650                                 $
         86,910      $
          83,122



     International drilling              15,036                                    19,013                                       64,074                               31,994




     Drilling services                   37,649                                    40,663                                      150,984                              115,116




     Well servicing                      18,111                                    17,193                                       67,554                               56,379



     Wireline services                   37,295                                    40,840                                      167,337                              128,137



     Coiled tubing services              10,934                                    10,265                                       44,038                               31,248




     Production services                 66,340                                    68,298                                      278,929                              215,764



      Consolidated operating costs                $
              103,989                                     $
              108,961                                $
         429,913     $
          330,880






     
                Gross margin:



     Domestic drilling                            $
              14,917                                      $
              14,936                                 $
         58,766      $
          46,154



     International drilling               6,610                                     4,118                                       20,087                                9,355




     Drilling services                   21,527                                    19,054                                       78,853                               55,509




     Well servicing                       7,044                                     7,176                                       26,246                               20,878



     Wireline services                    7,171                                    11,814                                       48,521                               35,579



     Coiled tubing services               1,774                                     2,327                                        6,564                                3,609




     Production services                 15,989                                    21,317                                       81,331                               60,066



      Consolidated gross margin                    $
              37,516                                      $
              40,371                                $
         160,184     $
          115,575






     
                Consolidated:



     Net loss                                   $
              (14,487)                                    $
              (5,233)                              $
         (49,011)    $
         (75,118)




     Adjusted EBITDA (1)                          $
              20,774                                      $
              28,576                                 $
         89,655      $
          49,873



               (1)    Adjusted EBITDA represents
                income (loss) before interest
                expense, income tax (expense)
                benefit, depreciation and
                amortization, impairment, and loss
                on extinguishment of debt. Adjusted
                EBITDA is a non-GAAP measure that
                our management uses to facilitate
                period-to-period comparisons of
                our core operating performance and
                to evaluate our long-term financial
                performance against that of our
                peers. We believe that this measure
                is useful to investors and analysts
                in allowing for greater transparency
                of our core operating performance
                and makes it easier to compare our
                results with those of other
                companies within our industry.
                Adjusted EBITDA should not be
                considered (a) in isolation of, or
                as a substitute for, net income
                (loss), (b) as an indication of cash
                flows from operating activities or
                (c) as a measure of liquidity. In
                addition, Adjusted EBITDA does not
                represent funds available for
                discretionary use. Adjusted EBITDA
                may not be comparable to other
                similarly titled measures reported
                by other companies.  A
                reconciliation of net loss as
                reported to adjusted EBITDA is
                included in the table on page 14.


                                                                        
              
       PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                                     
     
                Operating Statistics


                                                                                       
              (unaudited)




                                                                    Three months ended                                          
         
                Year ended



                                               December 31,                               September 30,                                     December 31,



                                                       2018                                         2018                  2018                            2017

                                                                                                                                                        ---



                   Domestic drilling:


      Average number of
       drilling rigs                                     16                                                    16                                          16             16


      Utilization rate                         99
            %                                                   99                                99
            %            95
                                                                                                               %                                                        %


      Revenue days                                    1,455                                                 1,459                                       5,808          5,524




      Average revenues per
       day                                                  $
        25,794                                                        $
         25,076                  $
        25,082  $
        23,403


      Average operating
       costs per day                                 15,542                                                14,839                                      14,964         15,047



      Average margin per
       day                                                  $
        10,252                                                        $
         10,237                  $
        10,118   $
        8,356





                   International drilling:


      Average number of
       drilling rigs                                      8                                                     8                                           8              8


      Utilization rate                         71
            %                                                   76                                77
            %            46
                                                                                                               %                                                        %


      Revenue days                                      525                                                   562                                       2,258          1,345




      Average revenues per
       day                                                  $
        41,230                                                        $
         41,158                  $
        37,272  $
        30,743


      Average operating
       costs per day                                 28,640                                                33,831                                      28,376         23,787


      Average margin per
       day                                                  $
        12,590                                                         $
         7,327                   $
        8,896   $
        6,956





                   Drilling services business:


      Average number of
       drilling rigs                                     24                                                    24                                          24             24


      Utilization rate                         90
            %                                                   92                                92
            %            78
                                                                                                               %                                                        %


      Revenue days                                    1,980                                                 2,021                                       8,066          6,869




      Average revenues per
       day                                                  $
        29,887                                                        $
         29,548                  $
        28,495  $
        24,840


      Average operating
       costs per day                                 19,015                                                20,120                                      18,719         16,759



      Average margin per
       day                                                  $
        10,872                                                         $
         9,428                   $
        9,776   $
        8,081





                   Well servicing:


      Average number of
       rigs                                             125                                                   125                                         125            125


      Utilization rate                         50
            %                                                   51                                49
            %            43
                                                                                                               %                                                        %



     Rig hours                                      44,051                                                44,155                                     171,851        150,240


      Average revenue per
       hour                                                    $
        571                                                           $
         552                     $
        546     $
        514




                   Wireline services:


      Average number of
       units                                            105                                                   104                                         107            115


      Number of jobs                                  2,407                                                 2,684                                      10,943         11,139


      Average revenue per
       job                                                  $
        18,474                                                        $
         19,618                  $
        19,726  $
        14,698




                   Coiled tubing services:


      Average number of
       units                                              8                                                    11                                          12             16


      Revenue days                                      346                                                   362                                       1,472          1,529


      Average revenue per
       day                                                  $
        36,728                                                        $
         34,785                  $
        34,376  $
        22,797


                                                          
              
            PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                          
              
            Reconciliation of Net Loss to Adjusted EBITDA


                                                                  
           
               and Consolidated Gross Margin


                                                                            
              (in thousands)


                                                                              
              (unaudited)




                                                       Three months ended                                                 
        
                Year ended


                                 December 31,                                     September 30,                   
              
          December 31,



                                         2018                                               2018                    2018                                 2017

                                                                                                                                                       ---



      Net loss as reported                    $
       (14,487)                                                              $
        (5,233)                        $
        (49,011)    $
        (75,118)




      Depreciation and
       amortization                    23,019                                                       23,501                                    93,554                     98,777



     Impairment                        1,815                                                          239                                     4,422                      1,902



     Interest expense                  9,816                                                        9,811                                    38,782                     27,039


      Loss on extinguishment of
       debt                                 -                                                                                                                          1,476


      Income tax expense
       (benefit)                          611                                                          258                                     1,908                    (4,203)



      Adjusted EBITDA(1)               20,774                                                       28,576                                    89,655                     49,873




      General and administrative       16,051                                                       14,043                                    74,117                     69,681



     Bad debt expense                    582                                                          111                                       271                         53


      Gain on dispositions of
       property and equipment,
       net                              (199)                                                     (1,861)                                   (3,121)                   (3,608)


      Other expense (income)              308                                                        (498)                                    (738)                     (424)


      Consolidated gross margin                 $
       37,516                                                                $
        40,371                          $
        160,184     $
         115,575


                                                                              
         
                PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                         
     
         Reconciliation of Net Income (Loss) as Reported to Adjusted Net Income (Loss)


                                                                            
       
                and Diluted EPS as Reported to Adjusted (Diluted) EPS


                                                                                    
              (in thousands, except per share data)


                                                                                                 
              (unaudited)




                                                                                                                                                                 Three months ended


                                                                                                                                             December 31,                           September 30,

                                                                                                                                                                                              ---

                                                                                                                                                     2018                                     2018

                                                                                                                                                                                              ---




     Net loss as reported                                                                                                                                  $
       (14,487)                                 $
      (5,233)



     Impairment                                                                                                                                    1,815                                             239



     Tax benefit related to adjustments                                                                                                            (426)                                           (56)



     Valuation allowance adjustments on deferred tax assets                                                                                      (2,236)                                          (581)



     Adjusted net loss(2)                                                                                                                                  $
       (13,642)                                 $
      (5,631)






     Basic weighted average number of shares outstanding, as reported                                                                             78,136                                          78,136



     Effect of dilutive securities                                                                                                                     -




     Diluted weighted average number of shares outstanding, as adjusted                                                                           78,136                                          78,136






     Adjusted (diluted) EPS(3)                                                                                                                               $
       (0.17)                                  $
      (0.07)






     Diluted EPS as reported                                                                                                                                 $
       (0.19)                                  $
      (0.07)



               (2)    Adjusted net loss
                represents net loss as reported
                adjusted to exclude impairments
                and the related tax benefit and
                valuation allowance adjustments
                on deferred tax assets. We
                believe that adjusted net loss
                is a useful measure to
                facilitate period-to-period
                comparisons of our core
                operating performance and to
                evaluate our long-term
                financial performance against
                that of our peers, although it
                is not a measure of financial
                performance under GAAP. Adjusted
                net loss may not be comparable
                to other similarly titled
                measures reported by other
                companies. A reconciliation of
                net loss as reported to adjusted
                net loss is included in the
                table above.




               (3)    Adjusted (diluted) EPS
                represents adjusted net loss
                divided by the weighted-average
                number of shares outstanding
                during the period, including the
                effect of dilutive securities,
                if any. We believe that adjusted
                (diluted) EPS is a useful
                measure to facilitate period-
                to-period comparisons of our
                core operating performance and
                to evaluate our long-term
                financial performance against
                that of our peers, although it
                is not a measure of financial
                performance under GAAP. Adjusted
                (diluted) EPS may not be
                comparable to other similarly
                titled measures reported by
                other companies. A
                reconciliation of diluted EPS as
                reported to adjusted (diluted)
                EPS is included in the table
                above.


                                                          
     
        PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                             
      
                Equipment Information


                                                            
      
                As of February 19, 2019




                                                                                                      Multi-well, Pad-capable



     
                Drilling Services Business Segments:                                  AC rigs                              SCR rigs      Total

                                                                                                                                              ---


     Domestic drilling                                                                       16                                                  16



     International drilling                                                                                                           8           8


                                                                                                                                             24






     
                Production Services Business Segments:                                550 HP                                600 HP       Total

                                                                                                                                              ---


     Well servicing rigs, by horsepower (HP) rating                                         113                                       12         125




                                                                                                                                          Total




     Wireline services units                                                                105



     Coiled tubing services units                                                             9

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SOURCE Pioneer Energy Services