Bronco Drilling Company, Inc. Announces Second Quarter Results

August 4, 2008 Filed Under: Oil and Gas  

Bronco Drilling Company, Inc., announced financial and operational results for the three months ended June 30, 2008.

Revenues for the second quarter of 2008 were $69.8 million compared to $62.3 million for the first quarter of 2008 and $74.7 million for the second quarter of 2007. Net income for the second quarter of 2008 was $4.3 million compared to $8.1 million for the previous quarter and $8.7 million for the second quarter of 2007. The Company generated EBITDA of $20.6 million for the second quarter of 2008 compared to $25.9 million for the previous quarter and $25.8 million for the second quarter of 2007. The Company’s fully diluted earnings per share for the quarter ended June 30, 2008 were $0.16.

Results for the second quarter of 2008 include non-recurring charges related to Bronco’s equity investment in Challenger Limited. Second quarter results were negatively impacted by a pre-tax loss of $1.5 million related to the sale and or contribution of rigs to Challenger and adjustments made to Challenger’s financial statements for the first quarter resulting in a $1.9 million reduction in Challenger’s pre-tax net income. These adjustments were made subsequent to Bronco filing its first quarter 10-Q and therefore recognized by Bronco in the second quarter. Without these non-recurring charges, fully diluted earnings per share for the quarter would be $0.21.

Land Drilling

Average operating land rigs for the first and second quarters of 2008 were 45 compared to 52 for the second quarter of 2007. Revenue days for the quarter increased to 3,355 from 2,848 for the previous quarter and decreased from 3,624 for the second quarter of 2007. Utilization for the second quarter of 2008 was 82% compared to 69% for the previous quarter and 76% for the second quarter of 2007. Average daily cash margins for our land drilling fleet for the quarter ended June 30, 2008 were $7,088 compared to $7,333 for the previous quarter and $7,941 for the second quarter of 2007.

Well Servicing

Average operating workover rigs for the second quarter of 2008 were 53 compared to 48 for the previous quarter and 29 for the second quarter of 2007. Revenue hours for the quarter increased to 25,533 from 23,865 for the previous quarter and from 14,427 for the second quarter of 2007. Utilization for the second quarter of 2008 was 75% compared to 77% for the previous quarter and 78% for the second quarter of 2007. Average hourly cash margins for our well servicing fleet for the quarter ended June 30, 2008, were $127 compared to $137 for the previous quarter and $149 for the second quarter of 2007.

Challenger

Eight of the rigs contributed or sold to Challenger are in Libya with three of the rigs currently operating. Challenger is still in the process of securing a debt facility to meet short-term capital needs including those related to start-up of the Bronco rigs and to mitigate downtime that has plagued Challenger’s operations due to past underinvestment in adequate rig supplies and spare equipment. Bronco considers the debt facility a pivotal component in determining the long-term success of Challenger and expects Challenger will continue to have unpredictable financial results in the near-term.

Recent Events and Outlook

Bronco increased its number of term contracts during the second quarter and now has approximately 57% of its estimated revenue days for the last two quarters of 2008 and 32% of its estimated revenue days for 2009 covered via term contracts. Total contracted revenue days do not include days attributable to our multi-well contracts, as we do not attempt to quantify the duration of those contracts. Inclusion of such contracts would increase the percentages stated above.

During the second quarter, Bronco bid and won a tender in Mexico with Pemex. This tender will require three rigs operating in the Chicontepec basin near Poza Rica, Mexico. Two of the rigs have begun to mobilize to Mexico with the third to follow in the coming weeks. We anticipate all three will be operating in Mexico by the end of August. The duration of the contract with Pemex for these rigs is through the end of 2009.

Bronco currently has six rigs contractually committed to the Bakken Shale. All of these rigs will require winterization and other modifications. Two of the rigs will require major modifications and refurbishment which will include a conversion from mechanical to electric power. We expect these rigs to be deployed to the Bakken during the third and fourth quarters of 2008.

About Bronco Drilling

Bronco Drilling Company, Inc., a publicly held company headquartered in Edmond, Oklahoma, is a provider of contract land drilling services and workover services to oil and natural gas exploration and production companies. Bronco’s common stock is quoted on The Nasdaq Global Market under the symbol “BRNC.” For more information about Bronco Drilling Company, Inc., visit http://www.broncodrill.com.