Pioneer Energy Services Reports Third Quarter 2019 Results

SAN ANTONIO, Oct. 31, 2019 /PRNewswire/ -- Pioneer Energy Services (OTCQX: PESX) today reported financial and operating results for the quarter ended September 30, 2019. Third quarter highlights include:

    --  Well servicing revenues increased 3% sequentially, and gross margin was
        29.4%, up from 28.7% in the prior quarter.
    --  International drilling fleet was 71% utilized and generated an average
        margin of $11,080 per day, roughly flat with the prior quarter.
    --  Domestic drilling fleet was 88% utilized and generated an average margin
        of $11,740 per day, which included the benefit of approximately $1,374
        per day for the early termination of a drilling contract.

Consolidated Financial Results

Revenues for the third quarter of 2019 were $146.4 million, down 4% from revenues of $152.8 million in the second quarter of 2019 ("the prior quarter"). Net loss for the third quarter of 2019 was $26.0 million, or $0.33 per share, compared with net loss of $12.9 million, or $0.17 per share, in the prior quarter. Adjusted net loss((1)) for the third quarter was $23.6 million, and adjusted EPS((2)) was a loss of $0.30 per share. These results compare to an adjusted net loss of $11.8 million, and an adjusted EPS loss of $0.15 per share in the prior quarter. Third quarter adjusted EBITDA((3)) was $7.1 million, down from $20.7 million in the prior quarter. The decrease in adjusted EBITDA and adjusted net loss was primarily due to approximately $12.6 million of additional net general and administrative expenses related to new compensation plans, partially offset by the cancellation of certain previously existing incentive plans, as well as professional fees incurred to evaluate debt restructuring strategies.

Operating Results

Production Services Business

Revenue from our production services business was $86.6 million in the third quarter, down 1% from the prior quarter. Well servicing revenues increased 3%, primarily driven by higher revenue rates and steady activity levels for both maintenance and completion activity. Well servicing average revenue per hour was $580 in the third quarter, up from $569 in the prior quarter, while rig utilization was 59%, down slightly from 60% in the prior quarter. Wireline services, which accounted for 51% of production services revenue, experienced a decrease in perforating stage count of approximately 6%, yielding a revenue decrease of 7%, much of which came from reduced activity in September. Coiled tubing services revenue increased 14% due to higher activity levels in the Rockies as wildlife activity limitations and poor weather conditions impacted the prior quarter. Coiled tubing revenue days totaled 339 in the third quarter, up from 307 in the prior quarter, while revenue per day was $36,714, up from $35,430 in the prior quarter.

Gross margin as a percentage of revenue from our production services business was 19% in the third quarter, up from 17% in the prior quarter. The increase in gross margin in all businesses was primarily due to actions taken to reduce labor and overhead costs to include the closure of certain wireline locations and repositioning of certain coiled tubing assets.

Drilling Services Business

Revenue from our drilling services business was $59.8 million in the third quarter, reflecting a decrease of 8% from the prior quarter. Average margin per day was $11,560, up from $10,396 in the prior quarter.

Our domestic drilling fleet was 88% utilized with average revenues per day of $27,598 in the third quarter, up from $26,864 in the prior quarter. Domestic drilling average margin per day was $11,740 in the third quarter, up from $10,131 in the prior quarter, primarily due to the benefit of $1.9 million, or approximately $1,374 per day, from recognition of the early termination of a domestic drilling contract.

International drilling rig utilization was 71% for the third quarter, down from 86% in the prior quarter, driven partially by one rig mobilizing to work for a new client during the quarter. Average revenues per day were $41,491, up from $40,806 in the prior quarter, while average margin per day for the third quarter was $11,080, up slightly from $11,023 in the prior quarter. The increases in revenue per day and margin per day were primarily due to the timing of mobilization and demobilization revenues recognized in the third quarter.

Currently, 15 of our 17 domestic drilling rigs are earning revenues, 12 of which are under term contracts. Ten rigs are working in the Permian, three in Appalachia and two in the Bakken. Of the rigs on term contracts, only one rig is set to expire later in the fourth quarter of 2019. Many of the recent contract renewals are for periods between six months and one year in length.

In Colombia, six of our eight rigs are currently earning revenue under daywork contracts. We expect four to six rigs to remain active for the remainder of 2019.

Comments from our President and CEO

"While weaker oil prices and generally challenging market conditions have continued to negatively impact the U.S. rig count, which fell 10% from the prior quarter and 20% from the prior year, our domestic drilling and well servicing businesses have remained highly utilized, and we have successfully increased gross margins both sequentially and year-over-year," said Wm. Stacy Locke, President and Chief Executive Officer. "We do anticipate the typical seasonal softening in well servicing activity during the fourth quarter, but we expect business to remain stable as our customers continue to appreciate our high-quality service offering. U.S. drilling activity should remain stable, although we anticipate continued dayrate pressure. We mobilized one rig from the Appalachian Basin to the Permian Basin in the third quarter under a term contract with a new client, and we continue to focus on positioning our equipment to generate optimum margins.

"Our international operations in Colombia experienced lower utilization sequentially as we mobilized one rig to a new client during the quarter, but we have maintained solid margins and expect the business to remain stable with four to six rigs operating during the fourth quarter. As we enter 2020, we anticipate favorable activity levels in the country as operators continue to execute on long term drilling programs.

"For the rest of the year, the remaining capital expenditures will be routine maintenance in nature. While the Term Loan is not expected to mature until December 2021, we continue to proactively explore various strategic and other alternatives to address the uncertainties related to our ability to refinance our outstanding debts as their maturities approach," concluded Mr. Locke.

Fourth Quarter 2019 Guidance

In the fourth quarter of 2019, we expect rig count to continue to decline, reduced completion activity and overall less spending by our clients, as well as typical seasonal impacts. As a result, we expect revenue from our production services business segments to be down approximately 15% to 19% as compared to the third quarter of 2019 driven primarily by wireline. We expect margins to be approximately 16% to 18% of revenue.

We expect domestic drilling services rig utilization to average approximately 90% to 94% and generate average margins per day of approximately $8,700 to $9,200 given recent dayrate renewal pressure in the U.S. In Colombia, we expect international drilling services rig utilization to average approximately 60% to 65% and generate average margins per day of approximately $8,500 to $9,500.

We expect general and administrative expense to be approximately $21 million in the fourth quarter of 2019, which includes approximately $2 million to $3 million in professional fees related to debt restructuring activities.

Liquidity

Working capital at September 30, 2019 was $97.5 million, down from $106.5 million at June 30, 2019 and $110.3 million at December 31, 2018. Cash and cash equivalents, including restricted cash, were $28.0 million, down from $31.1 million at June 30, 2019 and $54.6 million at year-end 2018. During the nine months ended September 30, 2019, we used $40.5 million of cash for routine capital expenditures and the purchase of property and equipment, and our cash provided by operations was $8.6 million.

Capital Expenditures

Cash capital expenditures during the nine months ended September 30, 2019 were $40.5 million, including capitalized interest. We estimate total cash capital expenditures for 2019 to be approximately $46 million to $49 million, which includes approximately $8 million for final payments on the construction of the new-build drilling rig and previous commitments on high-pressure pump packages for coiled tubing completion operations, all of which were made earlier in the year.

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 November 7(th). To access the replay, dial (201) 612-7415 and enter the pass code 13695038.

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 primarily in Texas and the Mid-Continent and Rocky Mountain regions. Pioneer also provides contract land drilling services to oil and gas operators in Texas, Appalachia and Rocky Mountain regions and internationally in Colombia.

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. These forward-looking statements are based on our current beliefs, intentions, and expectations and are not guarantees or indicators of future performance. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the foregoing 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 "Risk Factors" in Item 1A and "Special Note Regarding Forward-Looking Statements" in the Introductory Note to Part I. 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 any
              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


                                                                                            
              
       Condensed Consolidated Statements of Operations


                                                                                                        
     (in thousands, except per share data)


                                                                                                            
              (unaudited)




                                                        
          
                
           Three months ended                                                               Nine months ended



                                                                September 30,                                       June 30,                                              September 30,



                                            2019                   2018               2019                                                  2019              2018

                                                                                                                                                           ---






     Revenues                                    $
       146,398                                                 $
              149,332                                  $
              152,843                 $
         445,809      $
          448,592






     Costs and expenses:


      Operating costs                    108,059                            108,961                                                     115,970                                  332,614      325,924



     Depreciation                        22,924                             23,501                                                      22,851                                   68,428       70,535


      General and
       administrative                     30,485                             14,043                                                      18,028                                   68,271       58,066


      Bad debt expense
       (recovery), net                       196                                111                                                       (348)                                    (90)       (311)



     Impairment                               -                               239                                                         332                                    1,378        2,607


      Loss (gain) on
       dispositions of property
       and equipment, net                     17                            (1,861)                                                    (1,126)                                 (2,184)     (2,922)


      Total costs and expenses           161,681                            144,994                                                     155,707                                  468,417      453,899



      Income (loss) from
       operations                       (15,283)                             4,338                                                     (2,864)                                (22,608)     (5,307)






     Other income (expense):


      Interest expense, net of
       interest capitalized             (10,013)                           (9,811)                                                   (10,105)                                (30,003)    (28,966)


      Other income (expense),
       net                                 (588)                               498                                                         349                                      445        1,046



      Total other expense, net          (10,601)                           (9,313)                                                    (9,756)                                (29,558)    (27,920)





      Loss before income taxes          (25,884)                           (4,975)                                                   (12,620)                                (52,166)    (33,227)


      Income tax expense                   (132)                             (258)                                                      (324)                                 (1,909)     (1,297)




     Net loss                                   $
       (26,016)                                                $
              (5,233)                                $
              (12,944)               $
         (54,075)    $
          (34,524)






     Loss per common share:



     Basic                                        $
       (0.33)                                                 $
              (0.07)                                  $
              (0.17)                 $
         (0.69)      $
          (0.44)




     Diluted                                      $
       (0.33)                                                 $
              (0.07)                                  $
              (0.17)                 $
         (0.69)      $
          (0.44)





      Weighted-average number of shares
       outstanding:



     Basic                               78,473                             78,136                                                      78,430                                   78,405       77,897




     Diluted                             78,473                             78,136                                                      78,430                                   78,405       77,897


                                            
              
                PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                 
              
                Condensed Consolidated Balance Sheets


                                                                   
              (in thousands)




                                                                                    September 30,                                     December 31,
                                                                                             2019                        2018

                                                                                                                         ---

                                                                       (unaudited)                                      (audited)



       
                
                  ASSETS

    ---


       Current assets:


        Cash and cash equivalents                                                                    $
              26,955            $
            53,566



       Restricted cash                                                                       998                           998


        Receivables, net of allowance
         for doubtful accounts                                                            132,552                       130,881



       Inventory                                                                          22,086                        18,898


        Assets held for sale                                                                6,233                         3,582


        Prepaid expenses and other
         current assets                                                                     6,991                         7,109


        Total current assets                                                              195,815                       215,034




        Net property and equipment                                                        485,255                       524,858


        Operating lease assets                                                              7,692


        Other noncurrent assets                                                               931                         1,658



       Total assets                                                                                $
              689,693           $
            741,550





                                    LIABILITIES AND SHAREHOLDERS' EQUITY

    ---


       Current liabilities:



       Accounts payable                                                                             $
              32,127            $
            34,134



       Deferred revenues                                                                   1,616                         1,722



       Accrued expenses                                                                   64,559                        68,912


        Total current liabilities                                                          98,302                       104,768




        Long-term debt, less
         unamortized discount and
         debt issuance costs                                                              466,887                       464,552


        Noncurrent operating lease
         liabilities                                                                        6,189


        Deferred income taxes                                                               4,708                         3,688


        Other noncurrent liabilities                                                          459                         3,484



       Total liabilities                                                                 576,545                       576,492


        Total shareholders' equity                                                        113,148                       165,058



        Total liabilities and
         shareholders' equity                                                                       $
              689,693           $
            741,550


                        
              
                PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                       
              
                Condensed Consolidated Statements of Cash Flows


                                              
              (in thousands)


                                                
              (unaudited)




                                                                                 Nine months ended


                                                                                 September 30,


                                                2019                                2018

                                                                                    ---



      Cash flows from operating activities:



     Net loss                                         $
              (54,075)                          $
        (34,524)


      Adjustments to reconcile net loss to net cash
       provided by operating activities:



     Depreciation                            68,428                                          70,535


      Allowance for doubtful
       accounts, net of recoveries              (90)                                          (311)


      Write-off of obsolete
       inventory                                 502


      Gain on dispositions of
       property and equipment, net           (2,184)                                        (2,922)


      Stock-based compensation
       expense                                 2,013                                           3,395


      Phantom stock compensation
       expense                                  (99)                                          2,808


      Amortization of debt
       issuance costs and discount             2,335                                           2,153



     Impairment                               1,378                                           2,607


      Deferred income taxes                    1,020                                             189


      Change in other noncurrent
       assets                                  3,125                                             541


      Change in other noncurrent
       liabilities                           (4,163)                                          (735)


      Changes in current assets
       and liabilities:                      (9,552)                                       (22,246)



      Net cash provided by
       operating activities                    8,638                                          21,490





      Cash flows from investing activities:


      Purchases of property and
       equipment                            (40,543)                                       (48,778)


      Proceeds from sale of
       property and equipment                  4,778                                           4,665


      Proceeds from insurance
       recoveries                                641                                             980



      Net cash used in investing
       activities                           (35,124)                                       (43,133)





      Cash flows from financing activities:


      Proceeds from exercise of
       options                                     -                                             12


      Purchase of treasury stock               (125)                                          (549)


      Net cash used in financing
       activities                              (125)                                          (537)





      Net decrease in cash, cash
       equivalents and restricted
       cash                                 (26,611)                                       (22,180)


      Beginning cash, cash
       equivalents and restricted
       cash                                   54,564                                          75,648



      Ending cash, cash
       equivalents and restricted
       cash                                              $
              27,953                             $
        53,468


                                                                                                
              
          PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                                                         
        
                Operating Results by Segment


                                                                                                                
              (in thousands)


                                                                                                                  
              (unaudited)




                                                               
          
                
           Three months ended                                                              Nine months ended



                                                                       September 30,                                          June 30,                                          September 30,



                                                  2019                    2018               2019                                                     2019          2018

                                                                                                                                                                 ---


     
                Revenues:



     Domestic drilling                                  $
        38,168                                                     $
              36,586                               $
              39,652           $
          115,829    $
           108,146



     International drilling                    21,617                              23,131                                                         25,422                               68,682  62,515




     Drilling services                         59,785                              59,717                                                         65,074                              184,511 170,661




     Well servicing                            30,293                              24,369                                                         29,506                               86,053  68,645



     Wireline services                         43,874                              52,654                                                         47,386                              137,134 171,392



     Coiled tubing services                    12,446                              12,592                                                         10,877                               38,111  37,894




     Production services                       86,613                              89,615                                                         87,769                              261,298 277,931




     Consolidated revenues                             $
        146,398                                                    $
              149,332                              $
              152,843           $
          445,809    $
           448,592






     
                Operating costs:



     Domestic drilling                                  $
        21,931                                                     $
              21,650                               $
              24,698            $
          69,098     $
           64,297



     International drilling                    15,844                              19,013                                                         18,555                               50,884  49,038




     Drilling services                         37,775                              40,663                                                         43,253                              119,982 113,335




     Well servicing                            21,414                              17,193                                                         21,038                               61,348  49,443



     Wireline services                         38,349                              40,840                                                         41,804                              119,500 130,042



     Coiled tubing services                    10,521                              10,265                                                          9,875                               31,784  33,104




     Production services                       70,284                              68,298                                                         72,717                              212,632 212,589



      Consolidated operating costs                      $
        108,059                                                    $
              108,961                              $
              115,970           $
          332,614    $
           325,924






     
                Gross margin:



     Domestic drilling                                  $
        16,237                                                     $
              14,936                               $
              14,954            $
          46,731     $
           43,849



     International drilling                     5,773                               4,118                                                          6,867                               17,798  13,477




     Drilling services                         22,010                              19,054                                                         21,821                               64,529  57,326




     Well servicing                             8,879                               7,176                                                          8,468                               24,705  19,202



     Wireline services                          5,525                              11,814                                                          5,582                               17,634  41,350



     Coiled tubing services                     1,925                               2,327                                                          1,002                                6,327   4,790




     Production services                       16,329                              21,317                                                         15,052                               48,666  65,342



      Consolidated gross margin                          $
        38,339                                                     $
              40,371                               $
              36,873           $
          113,195    $
           122,668





                                  Consolidated:



     Net loss                                         $
        (26,016)                                                   $
              (5,233)                            $
              (12,944)          $
         (54,075)    $
         (34,524)




     Adjusted EBITDA (1)                                 $
        7,053                                                     $
              28,576                               $
              20,668            $
          47,643     $
           68,881



               (1)  
              Adjusted EBITDA
                represents income (loss) before
                interest expense, income tax
                (expense) benefit, depreciation and
                amortization, impairment, and any
                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 12.


                                                                                            
              
       PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                                                         
     
                Operating Statistics


                                                                                                           
              (unaudited)




                                                                                    Three months ended                                                                 Nine months ended



                                                                 September 30,                                June 30,                                                  September 30,



                                          2019                       2018                                     2019                                 2019      2018

                                                                                                                                                          ---



                   Domestic drilling:


      Average number of
       drilling rigs                        17                                   16                                                                 17                             17             16


      Utilization rate            88
            %                                  99                                                       95
            %                  94
            %           100
                                                                                 %                                                                                                             %


      Revenue days                       1,383                                1,459                                                              1,476                          4,279          4,353




      Average revenues per
       day                                       $
           27,598                                                    $
              25,076                            $
              26,864                 $
        27,069 $
        24,844


      Average operating
       costs per day                    15,858                               14,839                                                             16,733                         16,148         14,771



      Average margin per
       day                                       $
           11,740                                                    $
              10,237                            $
              10,131                 $
        10,921 $
        10,073





                   International drilling:


      Average number of
       drilling rigs                         8                                    8                                                                  8                              8              8


      Utilization rate            71
            %                                  76
                                                                                 %                                                      86
            %                  79
            %       79
       %


      Revenue days                         521                                  562                                                                623                          1,724          1,733




      Average revenues per
       day                                       $
           41,491                                                    $
              41,158                            $
              40,806                 $
        39,839 $
        36,073


      Average operating
       costs per day                    30,411                               33,831                                                             29,783                         29,515         28,297



      Average margin per
       day                                       $
           11,080                                                     $
              7,327                            $
              11,023                 $
        10,324  $
        7,776





                   Drilling services business:


      Average number of
       drilling rigs                        25                                   24                                                                 25                             25             24


      Utilization rate            83
            %                                  92
                                                                                 %                                                      92
            %                  89
            %       93
       %


      Revenue days                       1,904                                2,021                                                              2,099                          6,003          6,086




      Average revenues per
       day                                       $
           31,400                                                    $
              29,548                            $
              31,002                 $
        30,736 $
        28,042


      Average operating
       costs per day                    19,840                               20,120                                                             20,606                         19,987         18,622



      Average margin per
       day                                       $
           11,560                                                     $
              9,428                            $
              10,396                 $
        10,749  $
        9,420





                                  Well servicing:


      Average number of
       rigs                                125                                  125                                                                125                            125            125


      Utilization rate            59
            %                                  51
                                                                                 %                                                      60
            %                  58
            %       49
       %



     Rig hours                         52,210                               44,155                                                             51,895                        151,169        127,800


      Average revenue per
       hour                                         $
           580                                                       $
              552                               $
              569                    $
        569    $
        537




                                  Wireline services:


      Average number of
       units                                94                                  104                                                                 95                             98            107


      Number of jobs                     2,077                                2,684                                                              2,278                          6,697          8,536


      Average revenue per
       job                                       $
           21,124                                                    $
              19,618                            $
              20,802                 $
        20,477 $
        20,079




                                  Coiled tubing services:


      Average number of
       units                                 9                                   11                                                                  9                              9             13


      Revenue days                         339                                  362                                                                307                            997          1,126


      Average revenue per
       day                                       $
           36,714                                                    $
              34,785                            $
              35,430                 $
        38,226 $
        33,654


                                                                                  
              
         PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES


                                                                                   
              
         Reconciliation of Net Loss to Adjusted EBITDA


                                                                                           
        
               and Consolidated Gross Margin


                                                                                                  
              (in thousands)


                                                                                                   
              (unaudited)




                                                  
         
                
       Three months ended                                                                Nine months ended



                                                     September 30,                                    June 30,                                                  September 30,



                                  2019                  2018                                         2019                               2019         2018

                                                                                                                                                  ---



      Net loss as reported             $
       (26,016)                                                      $
              (5,233)                           $
             (12,944)             $
        (54,075)    $
        (34,524)




      Depreciation and
       amortization             22,924                            23,501                                                             22,851                             68,428     70,535



     Impairment                     -                              239                                                                332                              1,378      2,607


      Interest expense          10,013                             9,811                                                             10,105                             30,003     28,966


      Income tax expense           132                               258                                                                324                              1,909      1,297



      Adjusted EBITDA(1)         7,053                            28,576                                                             20,668                             47,643     68,881




      General and
       administrative           30,485                            14,043                                                             18,028                             68,271     58,066


      Bad debt expense
       (recovery), net             196                               111                                                              (348)                              (90)     (311)


      Loss (gain) on
       dispositions of property
       and equipment, net           17                           (1,861)                                                           (1,126)                           (2,184)   (2,922)


      Other expense (income)       588                             (498)                                                             (349)                             (445)   (1,046)


      Consolidated gross margin          $
       38,339                                                        $
              40,371                             $
              36,873              $
         113,195    $
          122,668


                                                                            
         
                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


                                                                                                            September 30,                                      June 30,



                                                                                                                     2019                                           2019

                                                                                                                                                                    ---




     Net loss as reported                                                                                                  $
              (26,016)                                $
       (12,944)



     Impairment                                                                                                        -                                                  332



     Tax benefit related to adjustments                                                                                -                                                 (77)



     Valuation allowance adjustments on deferred tax assets                                                        2,465                                                   884



     Adjusted net loss(2)                                                                                                  $
              (23,551)                                $
       (11,805)





      Basic weighted average number of shares outstanding, as reported                                             78,473                                                78,430



     Effect of dilutive securities                                                                                     -



      Diluted weighted average number of shares outstanding, as adjusted                                           78,473                                                78,430






     Adjusted (diluted) EPS(3)                                                                                               $
              (0.30)                                  $
       (0.15)






     Diluted EPS as reported                                                                                                 $
              (0.33)                                  $
       (0.17)



               (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 October 31, 2019




                                                                                                                            Multi-well, Pad-capable



     
                
                  Drilling Services Business Segments:                                              AC rigs                         SCR rigs    Total

                                                                                                                                                                  ---


     Domestic drilling                                                                                                  17                                         17



     International drilling                                                                                              -                                8         8


                                                                                                                                                                 25






     
                
                  Production Services Business Segments:                                            550 HP                           600 HP     Total

                                                                                                                                                                  ---


     Well servicing rigs, by horsepower (HP) rating                                                                    112                                12       124




                                                                                                                                                              Total




     Wireline services units                                                                                                                                 93



     Coiled tubing services units                                                                                                                             9

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SOURCE Pioneer Energy Services