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Consolidated Results Revenues for the third quarter of 2009 were $16.2 million compared to revenue of $27.5 million for the previous quarter and $73.0 million for the third quarter of 2008. Net loss for the third quarter of 2009 was $42.7 million compared to a net loss of $7.2 million for the previous quarter and a net loss of $0.9 million for the third quarter of 2008. The Company's fully diluted earnings per share for the quarter ended September 30, 2009, were a loss of $1.60 based on 26.7 million shares. Third quarter results include several non-recurring items. The company wrote down its investment in Challenger Limited by $21.2 million. The company recognized a loss of $24.0 million in conjunction with the company's sale of a 60% ownership interest in Bronco Drilling MX, S. de R.L. de C.V. ("Bronco MX") in the joint venture transaction with Carso Infraestructura y Constuccion, S.A.B. de C.V. The company also recognized expense of $1.3 million related to the drilling rigs contributed to Bronco MX in the joint venture transaction. The retirement of the company's previous credit facility resulted in a loss on early debt extinguishment of $2.9 million. The new credit facility with Banco Inbursa, S.A. and the joint venture transaction, which were both entered into during the quarter, resulted in certain advisory fees of $1.0 million. Additionally, the company recorded a loss of $1.6 million related to the change in fair value of the warrants issued in conjunction with the new credit facility. Excluding all non-recurring items and the loss on the warrants would result in a fully diluted loss per share for the quarter of $0.37. Land Drilling Average marketed land rigs for the third quarter of 2009 were 45 compared to 45 for the previous quarter and 42 for the third quarter of 2008. Revenue days for the quarter decreased to 980 from 1,311 for the previous quarter and from 3,208 for the third quarter of 2008. Utilization for the third quarter of 2009 was 23% compared to 32% for the previous quarter and 84% for the third quarter of 2008. Excluding non-recurring items, average daily cash margins for our land drilling fleet for the quarter ended September 30, 2009, were $3,576 compared to $6,304 for the previous quarter and $7,582 for the third quarter 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 Select Market under the symbol "BRNC." For more information about Bronco Drilling Company, Inc., visit http://www.broncodrill.com.
Bronco Drilling Company, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share par value)
September 30, December 31,
2009 2008
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents 18,118 $ 26,676
Receivables
Trade and other, net of allowance for doubtful accounts of
$3,229 and $3,830 in 2009 and 2008, respectively 17,918 65,817
Unbilled receivables 596 2,940
Income tax receivable 3,614 2,072
Current deferred income taxes 981 2,844
Current maturities of note receivable from affiliate 2,501 6,900
Prepaid expenses 1,069 572
Other current assets 1,660 -
Total current assets 46,457 107,821
PROPERTY AND EQUIPMENT - AT COST
Drilling rigs and related equipment 436,753 512,158
Transportation, office and other equipment 42,219 43,912
478,972 556,070
Less accumulated depreciation 137,066 123,915
341,906 432,155
OTHER ASSETS
Note receivable from affiliate, less current maturities 1,024 3,451
Investment in Challenger 39,800 62,875
Investment in Bronco MX 21,495 -
Intangibles, net, and other 3,217 6,052
65,536 72,378
$ 453,899 $ 612,354
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 8,109 $ 18,473
Accrued liabilities 6,678 16,249
Current maturities of long-term debt 88 1,464
Total current liabilities 14,875 36,186
LONG-TERM DEBT, less current maturities 51,613 116,083
WARRANT 6,257 -
DEFERRED INCOME TAXES 36,125 66,074
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 100,000
shares authorized; 26,668 and 26,346 shares
issued and outstanding at September 30, 2009 and December 31, 2008 269 267
Additional paid-in capital 306,552 304,015
Retained earnings 38,208 89,729
Total stockholders' equity 345,029 394,011
$ 453,899 $ 612,354
Bronco Drilling Company, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
(Unaudited) (Unaudited)
REVENUES
Contract drilling revenues, including 0%, 1%, 0%, and 1% to related
parties
$ 16,233 $ 63,509 $ 90,556 $ 178,076
Well service, including 0%, 5%, 0%, and 2% to related parties
- 9,474 3,799 27,017
16,233 72,983 94,355 205,093
EXPENSES
Contract drilling 14,031 39,190 62,109 109,099
Well service 443 8,201 4,015 19,222
Depreciation and amortization 11,664 12,939 36,152 37,321
General and administrative 5,379 13,199 15,497 24,353
Loss on Bronco MX transaction 23,964 - 23,964 -
Loss (gain) on Challenger transactions - 63 - (3,138 )
55,481 73,592 141,737 186,857
Income (loss) from operations (39,248 ) (609 ) (47,382 ) 18,236
OTHER INCOME (EXPENSE)
Interest expense (1,494 ) (969 ) (5,648 ) (3,356 )
Loss from early extinguishment of debt (2,859 ) - (2,859 ) -
Interest income 73 43 237 1,052
Equity in income (loss) of Challenger (1,271 ) 1,078 (1,828 ) 2,854
Impairment of investment in Challenger (21,247 ) - (21,247 ) -
Other (145 ) (520 ) (451 ) (67 )
Change in fair value of warrant (1,578 ) - (1,578 ) -
(28,521 ) (368 ) (33,374 ) 483
Income (loss) before income taxes (67,769 ) (977 ) (80,756 ) 18,719
Income tax expense (benefit) (25,115 ) (60 ) (29,235 ) 7,148
NET INCOME (LOSS) $ (42,654 ) $ (917 ) $ (51,521 ) $ 11,571
Income (loss) per common share-Basic $ (1.60 ) $ (0.03 ) $ (1.93 ) $ 0.44
Income (loss) per common share-Diluted $ (1.60 ) $ (0.03 ) $ (1.93 ) $ 0.44
Weighted average number of shares outstanding-Basic 26,663 26,290 26,637 26,275
Weighted average number of shares outstanding-Diluted 26,663 26,290 26,637 26,363
Non-GAAP Financial Measures This press release includes a presentation of average daily cash margin for our land drilling fleet which is not a financial measure recognized under generally accepted accounting principles, or GAAP. Average daily cash margin is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, minus well service revenue, plus well service expense, income tax expense, other non-recurring expense, general and administrative expense, depreciation and amortization and impairments divided by revenue days for the period. We have presented average daily cash margin because we use this metric as an integral part of our internal reporting to measure our performance and to evaluate the performance of our senior management. We consider this metric to be an important indicator of the operational strength of our business. A limitation of this metric, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management evaluates the costs of such tangible and intangible assets through other financial measures, such as capital expenditures, investment spending and return on capital. Therefore, we believe that average daily cash margin provides useful information to our investors regarding our performance and overall results of operations. Average daily cash margin is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either net income as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. In addition, this metric not is intended to represent funds available for dividends, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. This non-GAAP financial measure may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements. The following presents a reconciliation of average daily cash margin to net income, the most directly comparable GAAP financial measure (in thousands, except revenue days and average daily cash margin):
Three Months Ended Three Months Ended
September 30, June 30,
2009 2008 2009
(Unaudited) (Unaudited)
Reconciliation of average daily
cash margin to net income (loss):
Net income (loss) $ (42,654 ) $ (917 ) $ (7,158 )
Well service revenue - (9,474 ) (1,020 )
Well service expense 443 8,201 1,257
Income tax expense (benefit) (25,115 ) (60 ) (4,108 )
Other and non-recurring expense 53,788 435 2,401
General and administrative 5,379 13,199 4,930
Depreciation and amortization 11,664 12,939 11,962
Drilling margin 3,505 24,323 8,264
Revenue days 980 3,208 1,311
Average daily cash margin $ 3,576 $ 7,582 $ 6,304
SOURCE: Bronco Drilling Company, Inc. Bob Jarvis Investor Relations Bronco Drilling Company (405) 242-4444 EXT: 102 bjarvis@broncodrill.com For full details on Bronco Drilling Co Inc (BRNC) click here. Bronco Drilling Co Inc (BRNC) has Short Term PowerRatings of 7. Details on Bronco Drilling Co Inc (BRNC) Short Term PowerRatings is available at This Link.
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