8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): November 6, 2008

PIONEER DRILLING COMPANY

(Exact name of registrant as specified in its charter)

Texas	1-8182	74-2088619
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1250 N.E. Loop 410, Suite 1000 San Antonio, Texas	78209
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (210) 828-7689

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On November 6, 2008, we issued a press release announcing our results of operations for the quarter ended September 30, 2008. A copy of that press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

The information in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference therein.

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Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press release issued by Pioneer Drilling Company on November 6, 2008.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PIONEER DRILLING COMPANY
By:	/s/ William D. Hibbetts
	William D. Hibbetts Senior Vice President and Interim Chief Financial Officer

Date: November 6, 2008

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EXHIBIT INDEX

No.	Description
99.1	Press release issued by Pioneer Drilling Company on November 6, 2008.

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EX-99.1

Exhibit 99.1

	Contacts:	William Hibbetts, Interim CFO
		Pioneer Drilling Company (210) 828-7689
		Lisa Elliott / lelliott@drg-e.com
		Anne Pearson / apearson@drg-e.com
FOR IMMEDIATE RELEASE		DRG&E / 713-529-6600

Pioneer Drilling Reports Third Quarter 2008 Results

• Revenues up 64% to $174.2 million

• EPS increased 109% to $0.48          

SAN ANTONIO, Texas, November 6, 2008 – Pioneer Drilling Company, Inc. (AMEX: PDC) today reported financial and operating results for the three and nine months ended September 30, 2008. As previously announced, the Company has transitioned to a December 31 fiscal year end; accordingly, the three month period ended September 30 is reported as the third quarter of 2008.

Net income for the third quarter was $24.2 million, or $0.48 per diluted share, compared with $19.1 million, or $0.38 per diluted share, for the three months ended June 30, 2008 (“the prior quarter”), and $11.8 million, or $0.23 per diluted share, for the three months ended September 30, 2007 (“the year-earlier quarter”). The third quarter of 2008 included operating results from our Production Services Division, which was formed on March 1, 2008, and the contributions from our Colombian operations, which commenced in the third quarter of 2007.

Net income in the third quarter was impacted by a charge to selling, general and administrative expenses of approximately $2.7 million, or $0.03 per diluted share, related to the Company’s investigation of internal control over financial reporting completed earlier this year and payments to our former Chief Financial Officer under the Company’s Key Executive Severance Plan.

Revenues for the third quarter were $174.2 million, compared with $152.5 million for the prior quarter and $106.5 million for the year-earlier quarter. EBITDA⁽¹⁾ for the third quarter increased 21% to $64.7 million from the prior quarter and 94% from the year-earlier quarter.

Net income for the nine months ended September 30, 2008 was $55.2 million, or $1.09 per diluted share, compared with $42.1 million, or $0.84 per diluted share, for the nine months ended September 30, 2007. Revenues for the first nine months of 2008 were $440.2 million, compared with $312.6 million for the comparable period in 2007. EBITDA for the first nine months of 2008 increased 41% to $154.3 million from the comparable period in 2007 of $109.4 million.

“Both our Drilling Services Division and our Production Services Division performed well in the third quarter,” said Wm. Stacy Locke, President and CEO of Pioneer Drilling. “Revenues for the Drilling Services Division increased 14% from the prior quarter to $124.3 million due to an increase in rig utilization to 96%, compared to 90% in the prior quarter, and higher average revenues per day. More impressive was the 20% increase in Drilling Services margin⁽²⁾ to $54.0 million in the third quarter, compared to $45.0 million in the prior quarter. Higher average revenues per day, combined with slightly lower costs per day, generated a per-day drilling services margin of $8,967 in the third quarter, an increase of over 9% when compared to the prior quarter.

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“Colombian operations also performed very well in the third quarter,” added Mr. Locke. “In August 2008, we began daywork operations with our fourth rig, a 1000 horsepower diesel electric rig. Each rig in Colombia has operated at 100% utilization and generated drilling margins in excess of comparable rigs operating in the U.S. Currently, we are rigging up on location with the fifth rig, a 1500 horsepower SCR rig, and we anticipate a mid-November spud date.

“Revenues for the Production Services Division increased 15% to $49.9 million in the third quarter, compared to $43.3 million in the prior quarter of 2008. The Company did not own this division in 2007. Production Services margins⁽²⁾ increased 17% to $24.9 million, compared to $21.4 million in the prior quarter. As a percentage of revenues, the Production Services Division generated an impressive 50% margin in the third quarter, compared to a 49% margin in the second quarter.

“As we enter a potentially challenging period in our industry, our conservative approach to managing our balance sheet has prepared us well to remain financially strong,” Mr. Locke continued. “Our equipment is modern and well maintained and will be highly competitive in a soft market. While we have debt, our balance sheet is strong, with $60.4 million in working capital at September 30. Even in a down cycle, we anticipate that our strong cash flow will allow us to further reduce our debt during 2009.”

Pioneer Conference Call

Pioneer’s 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 in the call, dial 303-262-2055 at least 10 minutes early and ask for the Pioneer Drilling conference call. A replay will be available approximately two hours after the call ends and will be accessible until November 13. To access the replay, dial (303) 590-3000 and enter the pass code 11121169#.

The conference call will also be available on the Internet at Pioneer’s Web site at www.pioneerdrlg.com. To listen to the live call, visit Pioneer’s Web site at least 10 minutes early to register and download any necessary audio software. An archive will be available shortly after the call. For more information, please contact Donna Washburn at DRG^&E at (713) 529-6600 or e-mail dmw@drg-e.com.

About Pioneer

Pioneer Drilling Company provides land contract drilling services to independent and major oil and gas operators in Texas, Louisiana, Oklahoma, Kansas, the Rocky Mountain region and internationally in Colombia though it’s Pioneer Drilling Services Division. The Company also provides workover rig, wireline and fishing and rental services to producers in the U.S. Gulf Coast, Mid-Continent and Rocky Mountain regions through its Pioneer Production Services Division. Its fleet consists of 69 land drilling rigs that drill at depths of 6,000 and 18,000 feet, 70 workover rigs (sixty-five 550 horsepower rigs, four 600 horsepower rigs and one 400 horsepower rig), 55 wireline units, and fishing and rental tools.

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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 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 this news release as a result of a variety of factors, including general economic and business conditions and industry trends, risks associated with the current global economic crisis and its impact on capital markets and liquidity, the continued strength or weakness of the oil and gas production industry in the geographic areas in which we operate including the price of oil and natural gas in general, and the recent precipitous decline in prices in particular, and the impact of commodity prices and other factors upon future decisions about onshore exploration and development projects to be made by oil and gas companies and their ability to obtain necessary financing, the highly competitive nature of our business, difficulty in integrating the services of acquired companies, including the production services businesses of WEDGE, Competition and Paltec, in an efficient and effective manner, the availability, terms and deployment of capital, the availability of qualified personnel, changes in, or our failure or inability to comply with, government regulations, including those relating to the environment, the economic and business conditions of our international operations, challenges in achieving strategic objectives, and the risk that our markets do not evolve as anticipated. We have discussed many of these factors in more detail in our transition report on Form 10-KT for the fiscal year ended December 31, 2007 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2008 and September 30, 2008. These factors are not necessarily all the important factors that could affect us. Unpredictable or unknown factors we have not discussed in this news release, in our annual report on Form 10-K or in our quarterly reports on Form 10-Q 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 the date on which they are made and we undertake no duty to update or revise any forward-looking statements. We advise our shareholders that they should (1) be aware 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 GAAP financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided below.

(1) We define EBITDA as earnings before interest income (expense), taxes, depreciation and amortization. Although not prescribed under GAAP, we believe the presentation of EBITDA is relevant and useful because it helps our investors understand our operating performance and makes it easier to compare our results with those of other companies that have different financing, capital or tax structures. EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. A reconciliation of net income to EBITDA is included in the operating statistic table in this press release. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies. In addition, EBITDA does not represent funds available for discretionary use.

(2) Drilling Services margin represents contract drilling revenues less contract drilling operating costs. Production Services margin represents production services revenues less production services operating costs. We believe that Drilling Services margin and Production Services margin are useful measures for evaluating financial performance, although they are not measures of financial performance under GAAP. However, Drilling Services margin and Production Services margin are common measures of operating performance used by investors, financial analysts, rating agencies and Pioneer management. A reconciliation of Drilling Services margin and Production Services margin to net earnings is included in the operating statistics table in this press release. Drilling Services margin and Production Services margin as presented may not be comparable to other similarly titled measures reported by other companies.

—Financial Statements Follow –

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PIONEER DRILLING COMPANY 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,
	2008			2007			2008			2008			2007
Revenues	$	174,245		$	106,516		$	152,547		$	440,189		$	312,642
Costs and Expenses:
Operating Costs		95,367			65,237			86,193			251,986			186,822
Depreciation and amortization		24,225			16,093			20,580			61,924			46,927
Selling, general and administrative		12,840			5,252			12,150			32,712			13,792
Bad debt expense (recovery)		(260	)		2,627			(92	)		(216	)		2,627
Total operating costs		132,172			89,209			118,831			346,406			250,168
Operating income		42,073			17,307			33,716			93,783			62,474
Other income (expense):
Interest expense		(3,773	)		(14	)		(4,265	)		(9,612	)		(15	)
Interest income		205			731			205			995			2,474
Other		(1,551	)		11			(930	)		(1,389	)		39
Total other income (expense)		(5,119	)		728			(4,990	)		(10,006	)		2,498
Income before income taxes		36,954			18,035			28,726			83,777			64,972
Income tax expense		(12,760	)		(6,255	)		(9,609	)		(28,619	)		(22,886	)
Net earnings	$	24,194		$	11,780		$	19,117		$	55,158		$	42,086
Earnings per common share:
Basic	$	0.49		$	0.24		$	0.38		$	1.11		$	0.85
Diluted	$	0.48		$	0.23		$	0.38		$	1.09		$	0.84
Weighted average number of shares outstanding:
Basic		49,791			49,651			49,789			49,780			49,635
Diluted		50,449			50,205			50,483			50,426			50,193

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PIONEER DRILLING COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

	September 30, 2008		December 31, 2007
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	17,342	$	76,703
Receivables, net		87,436		47,370
Unbilled receivables		18,676		7,861
Deferred income taxes		7,013		3,670
Inventory		4,448		1,180
Prepaid expenses and other current assets		8,775		5,073
Total current assets		143,690		141,857
Net property and equipment		603,107		417,022
Deferred income taxes		—		573
Goodwill		106,264		—
Other long-term assets		107,015		760
Total assets	$	960,076	$	560,212
Liabilities and Equity
Current liabilities:
Accounts payable	$	30,906	$	21,424
Current portion of long-term debt		4,452		—
Income taxes payable		4,698		—
Prepaid drilling contracts		3,447		1,933
Accrued expenses		39,777		18,693
Total current liabilities		83,280		42,050
Long-term debt, less current portion		278,199		—
Other long term liabilities		5,418		254
Deferred taxes		62,898		46,836
Total liabilities		429,795		89,140
Total shareholders’ equity		530,281		471,072
Total liabilities and shareholders’ equity	$	960,076	$	560,212

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PIONEER DRILLING COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Nine months ended September 30,
	2008			2007
Cash flows from operating activities:
Net earnings	$	55,158		$	42,086
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		61,924			46,927
Allowance for doubtful accounts		270			2,627
Loss (gain) on dispositions of property and equipment		(512	)		2,501
Stock-based compensation expense		2,924			2,714
Deferred income taxes		10,700			10,454
Change in other assets		355			5
Change in non-current liabilities		(329	)		(74	)
Changes in current assets and liabilities		(4,735	)		8,043
Net cash provided by operating activities		125,755			115,283
Cash flows from investing activities:
Acquisition of WEDGE, net of cash acquired		(313,606	)		—
Acquisition of Competition Wireline, net of cash acquired		(26,770	)		—
Acquisition of Competition Paltec		(6,520	)		—
Purchases of property and equipment		(99,794	)		(126,994	)
Proceeds from insurance recoveries		2,638			—
Purchase of auction rate securities, net		(16,475	)		—
Proceeds from sale of property and equipment		2,712			2,970
Net cash used in investing activities		(457,815	)		(124,024	)
Cash flows from financing activities:
Payments of debt		(44,404	)		—
Proceeds from issuance of debt		319,500			—
Debt issuance costs		(3,319	)		—
Proceeds from sale of common stock		672			217
Excess tax benefit of stock option exercises		250			73
Net cash provided by financing activities		272,699			290
Net decrease in cash and cash equivalents		(59,361	)		(8,451	)
Beginning cash and cash equivalents		76,703			74,754
Ending cash and cash equivalents	$	17,342		$	66,303

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PIONEER DRILLING COMPANY AND SUBSIDIARIES

Operating Statistics

(in thousands)

(unaudited)

	Three months ended									Nine months ended
	September 30,						June 30,			September 30,
	2008			2007			2008			2008			2007
Drilling Services Division:
Revenues	$	124,297		$	106,516		$	109,250		$	333,587		$	312,642
Operating costs		70,342			65,237			64,277			198,115			186,822
Drilling services margin (1)	$	53,955		$	41,279		$	44,973		$	135,472		$	125,820
Average number of drilling rigs		68.0			67.3			67.0			67.0			65.7
Utilization rate		96	%		90	%		90	%		90	%		90	%
Revenue days		6,017			5,559			5,475			16,528			16,149
Average revenues per day	$	20,658		$	19,161		$	19,954		$	20,183		$	19,360
Average operating costs per day		11,691			11,735			11,740			11,987			11,569
Drilling services margin per day (2)	$	8,967		$	7,426		$	8,214		$	8,196		$	7,791
Production Services Division:
Revenues	$	49,948		$	—		$	43,297		$	106,602		$	—
Operating costs		25,025			—			21,916			53,871			—
Production services margin (1)	$	24,923		$	—		$	21,381		$	52,731		$	—
EBITDA (3)	$	64,747		$	33,411		$	53,366		$	154,318		$	109,440
Reconciliation of combined Drilling services margin and Production services margin and EBITDA to net earnings:
Drilling services margin	$	53,955		$	41,279		$	44,973		$	135,472		$	125,820
Production services margin		24,923			—			21,381			52,731			—
Combined margin		78,878			41,279			66,354			188,203			125,820
General and administrative		(12,840	)		(5,252	)		(12,150	)		(32,712	)		(13,792	)
Bad debt (expense) recovery		260			(2,627	)		92			216			(2,627	)
Other income (expense)		(1,551	)		11			(930	)		(1,389	)		39
EBITDA		64,747			33,411			53,366			154,318			109,440
Depreciation and amortization		(24,225	)		(16,093	)		(20,580	)		(61,924	)		(46,927	)
Interest income (expense), net		(3,568	)		717			(4,060	)		(8,617	)		2,459
Income tax expense		(12,760	)		(6,255	)		(9,609	)		(28,619	)		(22,886	)
Net earnings	$	24,194		$	11,780		$	19,117		$	55,158		$	42,086

(1) Drilling services margin represents contract drilling revenues less contract drilling operating costs. Production services margin represents production services revenue less production services operating costs. Pioneer believes that Drilling services margin and Production services margin are useful measures for evaluating financial performance, although they are not measures of financial performance under GAAP. However, Drilling services margin and Production services margin are common measures of operating performance used by investors, financial analysts, rating agencies and Pioneer’s management. A reconciliation of Drilling services margin and Production services margin to net earnings is included in the operating statistics table. Drilling services margin and production services margin as presented may not be comparable to other similarity titled measures reported by other companies.

(2) Drilling services margin per revenue day represents the Drilling Services Division’s average revenue per revenue day less average operating costs per revenue day.

(3) We define EBITDA as earnings before interest income (expense), taxes, depreciation and amortization. Although not prescribed under GAAP, we believe the presentation of EBITDA is relevant and useful because it helps our investors understand our operating performance and makes it easier to compare our results with those of other companies that have different financing, capital or tax structures. EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. A reconciliation of net income to EBITDA is included in the operating statistics table. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies. In addition, EBITDA does not represent funds available for discretionary use.

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PIONEER DRILLING COMPANY AND SUBSIDIARIES

Capital Expenditures

(in thousands)

											Approved Budget
	Three months ended						Nine months ended				Fiscal Year Ending
	September 30,				June 30,		September 30,				December 31,
	2008		2007		2008		2008		2007		2008
Capital expenditures:
Drilling Services Division:
Routine rigs	$	3,736	$	5,585	$	3,814	$	11,557	$	15,183	$	21,590
Discretionary		15,211		17,311		13,704		47,929		39,055		50,150
Tubulars		—		6,621		3		1,050		12,067		12,600
New-builds and acquisitions		11,531		20,941		1,087		13,365		66,086		43,500
Total Drilling Services Division capital expenditures		30,478		50,458		18,608		73,901		132,391		127,840
Average routine rig capital expenditures per revenue day (1)	$	621	$	1,005	$	697	$	699	$	940	$	976
Production Services Division:
Routine		2,460		—		835		3,403		—		2,330
Discretionary		819		—		—		1,029				4,500
New-builds and acquisitions		13,614		—		6,008		22,443		—		39,500
Total Production Services Division capital expenditures		16,893		—		6,843		26,875		—		46,330
Total capital expenditures	$	47,371	$	50,458	$	25,451	$	100,776	$	132,391	$	174,170

(1) Average routine rig capital expenditures per revenue day represents the Drilling Services Division’s routine rig capital expenditures divided by the number of revenue days for each period presented.

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PIONEER DRILLING COMPANY AND SUBSIDIARIES

Drilling Rig, Workover Rig and Wireline Unit Information

	Rig Type
	Mechanical	Electric	Total Rigs
Drilling Services Division:
Drilling rig horsepower ratings:
550 to 700 HP	6	—		6
750 to 900 HP	15	2		17
1000 HP	17	12		29
1200 to 1500 HP	3	14		17
Total	41	28		69
Drilling drilling depth ratings:
Less than 10,000 feet	8	2		10
10,000 to 13,900 feet	30	7		37
14,000 to 18,000 feet	3	19		22
Total	41	28		69
Production Services Division:
Workover rig horsepower ratings:
400 HP				1
550 HP				65
600 HP				4
Total				70
Wireline units				55
Fishing & Rental Tools Inventory			$	15 Million

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