Grey Wolf, Inc. Announces Operating Results for the Quarter Ended June 30, 2000
HOUSTON, July 27 /PRNewswire/ -- Grey Wolf, Inc. (Amex: GW) ("Grey Wolf"
or the "Company"), reported a net loss of $5.5 million, or $0.03 per share on
a diluted basis, for the three months ended June 30, 2000, compared with a net
loss of $12.2 million, or $0.07 per share on a diluted basis, for the second
quarter of 1999. Revenues for the second quarter of 2000 were $54.9 million
compared with revenues for the second quarter of 1999 of $23.7 million. For
the six months ended June 30, 2000, the Company reported a net loss of $11.2
million, or $0.06 per share on a diluted basis, compared with a net loss of
$21.7 million, or $0.13 per share on a diluted basis, for the first six months
of 1999. The results for the six months ended June 30, 1999, include an
extraordinary item of $0.4 million, net of tax, for the write-off of deferred
financing costs.
During the second quarter of 2000, the Company's rig fleet operated a
total of 5,871 days compared to 3,035 days for the second quarter of 1999.
Utilization for the second quarter of 2000 was 59% compared to 29% for the
second quarter a year ago. Since the second quarter of 1999, the Company has
reactivated 19 drilling rigs from cold-stacked status bringing the marketed
rig fleet to a total of 79. Work is currently underway to reactivate three
more cold-stacked rigs, two of which are already under contract. Six
additional rigs are expected to be returned to service by year end. Capital
expenditures for the remainder of the year are expected to be between
$15.0 million and $18.0 million assuming an additional nine rigs are
reactivated during the third and fourth quarters of 2000. This includes
$3.7 million for three additional top drives that the Company expects to take
delivery of in the third quarter of 2000.
Tom Richards, President and Chief Executive Officer said, "The increase in
activity in the second quarter represents the fourth consecutive quarter of
improving utilization and we believe the third quarter will continue this
trend. Beginning in the last two weeks of the second quarter we have seen a
step change in the demand for our drilling rigs. Today, we have 77 rigs
working which is up from an average of 64 in the second quarter of 2000 and
61 in the first quarter of 2000. This increase in activity, combined with
current bid rates of between $8,000 and $10,000 per day, without fuel, is a
very positive indication of continued improvement in the second half of 2000."
Mr. Richards continued, "The rates we are bidding today will show up in
our financial results during the fourth quarter of this year because we
continue to add to the backlog of work on each of our marketed rigs. If the
current utilization and dayrate trends continue through the fourth quarter, we
expect the fourth quarter of 2000 net income to be breakeven."
Mr. Richards added, "To retain our competitive edge as the demand for our
services improves, Grey Wolf continues with its focus on skilled people and
premium equipment. We have a proactive training program and have provided a
5% wage increase on July 1st of this year. In addition to our five top drives
that are working today, we will be adding three more in the third quarter."
Average revenue per day for the second quarter of 2000, of $9,357, was up
significantly compared to the average of $7,825 for the second quarter of
1999. The increase in average revenue per day during the second quarter of
2000 compared to the prior year is due to increases in the average per day
rate received on both daywork and turnkey contracts.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the second quarter of 2000 were up $9.6 million to $6.6 million compared
to negative EBITDA of $3.0 million for the second quarter of 1999. The
improvement is due to the increased level of activity and higher contract
rates. While utilization and dayrates were higher in the second quarter than
in the first quarter, EBITDA for the second quarter of 2000 was slightly less
than EBITDA for the first quarter of 2000 due in part to fewer turnkey days as
a percentage of total operating days but due primarily to a decline of turnkey
revenue per day of approximately one-third during the second quarter of 2000
versus the first quarter. Average turnkey revenue per day was lower in the
second quarter primarily due to a shift in the location, and reduced depth and
complexity level of the turnkey wells drilled in the second quarter.
The average revenue per day generated under daywork contracts in the
second quarter of 2000 was up approximately $450 per day or 7% from the first
quarter of 2000. Average revenue per day generated on all contracts for the
second quarter of 2000, of $9,357, was lower however, than the average revenue
per day of $10,616 for the first quarter of 2000 due to the decline in turnkey
revenue per day as discussed above.
The Company's cash balance at the end of the second quarter of 2000 was
$63.3 million. As of today, the Company's cash balance is approximately
$54.1 million. At June 30, 2000, the Company had total long-term indebtedness
of $250.0 million with no borrowings outstanding under the Company's
$50.0 million line of credit. Interest expense for the second quarter of
2000 was $6.0 million. Capital expenditures for the current quarter were $5.8
million.
This press release contains forward-looking statements within the meaning
of the Securities Act of 1933 and the Securities Exchange Act of 1934. The
specific forward-looking statements cover our expectations and projections
regarding increasing demand, third and fourth quarter utilization and
operating results, reactivation of our cold-stacked rigs, attainment of our
margin goals, and capital expenditures in 2000. These forward-looking
statements are subject to a number of important factors, many of which are
beyond our control, that could cause actual results to differ materially,
including oil and gas prices and trends in those prices, the pricing and other
competitive policies of our competitors, uninsured or under-insured casualty
losses, unexpected costs under turnkey drilling contracts, weather conditions,
and the overall level of drilling activity in our market areas. Please refer
to our Registration Statement on Form S-3, filed with the Securities and
Exchange Commission on July 6, 2000, for additional information concerning
risk factors that could cause actual results to differ from these forward-
looking statements.
Grey Wolf, Inc., headquartered in Houston, Texas, is a leading provider of
contract oil and gas land drilling services in the Ark-La-Tex, Gulf Coast,
Mississippi/Alabama and South Texas regions with a total drilling rig fleet of
125.
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
(In thousands, except per share amounts)
(unaudited)
Revenues $ 54,937 $ 23,748 $ 113,646 $ 61,428
Costs and expenses:
Drilling operations 46,348 24,958 96,383 60,783
Depreciation and
amortization 9,002 8,474 17,891 16,209
Provision for doubtful
accounts 48 59 92 150
General and administrative 1,915 1,735 3,725 3,346
Unusual charges --- --- --- 320
Total costs and expenses 57,313 35,226 118,091 80,808
Operating income (2,376) (11,478) (4,445) (19,380)
Other income (expense):
Gain (loss) on sale of
assets 2 195 96 260
Interest income 961 431 1,145 854
Interest expense (6,012) (6,018) (11,987) (12,010)
Other, net (10) (31) (32) (83)
Other income (expense), net (5,059)
(5,423) (10,778) (10,979)
Net income (loss) before
income taxes (7,435) (16,901) (15,223) (30,359)
Income taxes (1,963) (4,664) (4,059) (9,053)
Net income (loss) (5,472) (12,237) (11,164) (21,306)
Extraordinary item, net of tax --- --- --- (420)
Net income (loss) applicable
to common stock $(5,472) $(12,237) $(11,164) $(21,726)
Net income (loss) per common
share:
Basic $ (.03) $ (.07) $ (.06) $ (.13)
Diluted $ (.03) $ (.07) $ (.06) $ (.13)
Weighted average common
shares outstanding:
Basic 178,592 165,077 171,923 165,071
Diluted 178,592 165,077 171,923 165,071
Operating data for the periods:
Number of operating days 5,871 3,035 11,401 6,996
Number of total available
days 9,919 10,374 19,838 20,634
Utilization rate 59% 29% 57% 34%
Average revenue per day $ 9,357 $ 7,825 $ 9,968 $ 8,780
Rigs at June 30, 2000:
Marketable rigs 76
Labor contract - non-owned rig 1
Cold-stacked rigs 34
Inventory rigs 15
Total 126
SOURCE Grey Wolf, Inc.
CO: Grey Wolf, Inc.
ST: Texas
IN: OIL
SU: ERN
07/27/2000 07:55 EDT prnewswire.com |
