Pioneer Energy's CEO Presents at Bank of America Merrill Lynch 2012 Global Energy Conference (Transcript)
November 14, 2012 6:51 PM ET
Pioneer Energy Services Corp. (PES)
Bank of America Merrill Lynch 2012 Global Energy Conference Transcript
November 13, 2012 3:35 PM ET
Stacy Locke - Chief Executive Officer
… by Pioneer, what we've seen over the last couple of years there's a lot of [land drillers] have diversified into pressure pumping. Pioneer is taking a little bit different routes in well servicing, some wire-lines and coil tubing. Presenting today is Stacy Locke, CEO. I consider him one of the [Straight shooters] in the oil business and with that turning to Stacy.
Good afternoon, everyone. Just a quick overview, we're based out of San Antonio, 3700 employees, and we call that the headquarters at the Eagle Ford shale, these days. Very low market cap, good time to look at these stocks that are fairly beaten down. We're one of the few small caps in the space. Before I get into the what - an overview of the company, I just want to make a couple of industry comments or some of the trends that we are seeing, as you can see from the screen we're in drilling but we're also in the production service space, in well servicing wire-line, mostly case hold and in coil-tubing so we do a pretty full spectrum of drilling the well and all the steps to put the well on production.
And in those four core business areas, three of them have been a little bit soft. Drilling, softened in - started in the second quarter, wireline to quick to follow there. As we guided going into the third quarter we thought the declines were fairly modest and price and the utilization we felt like the pricing declines were on order of 5% to 10% as we proceeded through the third quarter, we could see that the pricing declines were a little greater more towards the 10% level.
End utilization still holding in pretty good but off a little bit. As we gave our third quarter conference call, I feel like in terms of the pricing that we're probably there on pricing. I'm not seeing a lot of continued deterioration in pricing on any of the business lines at this point.
But in the case of land drilling since almost 80% of rigs are under term contracts, as those that renew in the fourth quarter, those that renew in the first and second quarter of next year. We'll gravitate towards that lower pricing until activities pick-up, of course this time of year we are entering, but mostly on the production service side, fewer hors shorter days holidays that all affect the production services business and then it takes a while in the new year to cycle back up with the new budget. So this is historically a little bit slower time of year in a little few hours due to day light.
But of course last quarter we had Isaac that impacted a number of our businesses namely, cased-hole wireline, coil tubing along the gulf coast, Texas Louisiana there so, but I would say the outlook is stable. It all hinges on oil prices, probably more than anything else, if oil stays firm and by firm I mean in the $85 plus range, we know gas in the shadows but it's creeping upward those dynamics are looking better longer term but the real key to the businesses here for us and most - everybody else's is oil.
And we're running over 90% of our revenues generated from oil on drilling and over 80% in production services. So that's the key if oil falls apart these businesses could suffer further but right now I think the oil is fairly stable, outlook is pretty good. I think what happened this year, is oil have been up in the $120 to $127 range and quickly came down to $78 I believe it was in the late summer.
And a lot of the operators were shocked by that, pulled back a little bit they had already spent more than the half-way point of their budgets and when they pulled back and paused a bit, everybody dropped a little bit of equipment drilling coil, wireline and anytime in any market they're stacked equipment pricing comes under pressure and that's exactly what happened. So the operators have enjoyed this lower price environment have stayed very busy but not quite at the same level they did in the first half of the year.
And we'll wait and see what happens in 2013 but if they ratchet up their budgets and get back to business then we expect some of this equipment to be picked up, probably more in the second third and improving into fourth quarter of next year, as long the price of oil holds in there, so that's kind of the backdrop.
Looking at our four core business lines, in Well Servicing [oil] 108 well service units, we've added 10 recently in the 112 and 116 foot mast variety which has been in demand particularly in Eagle Ford and the Bakken, but we'll end the year at 108 well servicing units.
We'll end the year in wireline at the 120, we're there now. We've had quite a bit of growth in both those businesses over the last two to three years, coil tubing also has been a steady grower, we added - we'll add a total of 3 units this year, we'll end at 13 units, 4 offshore and 8 onshore and then 68 drilling rigs, we have 4 more to deliver. And those will be delivered and one more will be delivered in December and then probably, one January, February and March. And that will complete our new-build drilling program.
Copyright 2012 Seeking Alpha
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.