Drillers Technology Corp.

Drillers Technology Corp.

March 28, 2005 17:11 ET

Drillers Technology Releases Fourth Quarter Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: DRILLERS TECHNOLOGY CORP.

TSX SYMBOL: DLR

MARCH 28, 2005 - 17:11 ET

Drillers Technology Releases Fourth Quarter Results

CALGARY, ALBERTA--(CCNMatthews - March 28, 2005) - Drillers Technology
Corp. (TSX:DLR)



Highlights:
- In 2004 Drillers Technology matured into an International operation.
- On December 21, 2004 the Mexican Joint Venture, Drillers Technology de
Mexico commenced drilling under a new Burgos V contract. Substantial
day rate increase and combined with continuing high utilization are
expected to materially improve financial performance.
- 37% increase in 2004 revenue compared to 2003.
- 94% increase in 2004 EBITDA compared to 2003.
- 33% reduction in term debt over past year.


FINANCIAL SUMMARY

The information provided below includes the Corporation's proportionate
share of the Mexican Joint Venture's revenue, net earnings and cash flow.



------------------------------------------------------------------------
($,000) Three months ended Dec 31 Year ended Dec 31
------------------------------------------------------------------------
2004 2003 2004 2003
------------------------------------------------------------------------
Consolidated Financial Results
------------------------------------------------------------------------
Revenue $8,980 $8,296 $32,791 $23,952
------------------------------------------------------------------------
Operating expenses 4,804 6,133 21,776 18,442
------------------------------------------------------------------------
Gross margin 4,176 2,163 11,015 5,510
------------------------------------------------------------------------
% of revenue 47% 26% 34% 23%
------------------------------------------------------------------------
General and administrative 1,280 602 2,722 2,146
------------------------------------------------------------------------
Depreciation and amortization 1,547 1,249 5,387 3,803
------------------------------------------------------------------------
Financial items 427 600 2,012 1,254
------------------------------------------------------------------------
Gain (loss) on sale of rigs - (328) 860 1,039
------------------------------------------------------------------------
Income tax (expense) recovery (236) 68 (115) 250
------------------------------------------------------------------------
Net earnings(loss) 686 (548) 1,639 (404)
------------------------------------------------------------------------
Net earnings(loss) per diluted
share 0.02 (0.02) 0.05 (0.01)
------------------------------------------------------------------------
Cash flow from operations 2,123 927 5,772 2,013
------------------------------------------------------------------------
Cash flow per diluted share 0.07 0.03 0.19 0.07
------------------------------------------------------------------------
EBITDA 2,896 1,233 8,553 4,403
------------------------------------------------------------------------

------------------------------------------------------------------------
Financial Position
------------------------------------------------------------------------
Working capital before current
portion long-term debt 1,216 2,358
------------------------------------------------------------------------
Long-term debt including current
portion 17,088 23,013
------------------------------------------------------------------------
Shareholders equity 48,982 47,265
------------------------------------------------------------------------


------------------------------------------------------------------------
Three months ended Dec 31 Year ended Dec 31
------------------------------------------------------------------------
2004 2003 2004 2003
------------------------------------------------------------------------
Operating Results
------------------------------------------------------------------------
Wholly owned
------------------------------------------------------------------------
Number of rigs 6 7 6 7
------------------------------------------------------------------------
Operating days 242 273 862 1,060
------------------------------------------------------------------------
Rig utilization rate 44% 43% 39% 41%
------------------------------------------------------------------------
Cdn industry utilization rate 62% 57% 53% 53%
------------------------------------------------------------------------

------------------------------------------------------------------------
Mexico - Joint Venture
------------------------------------------------------------------------
Number of operating rigs 8 7 8 7
------------------------------------------------------------------------
Operating days 584 549 2,429 1,554
------------------------------------------------------------------------
Rig utilization rate 79% 85% 87% 90%
------------------------------------------------------------------------
Drillers Technology share of JV
------------------------------------------------------------------------
Share of rigs 4 3.5 4 3.5
------------------------------------------------------------------------
Share of operating days 298 280 1,239 793
------------------------------------------------------------------------


Mexican Joint Venture Results of operations

The Corporation has included in its accounts the following information
in respect of its 51% ownership in the Mexican Joint Venture.



------------------------------------------------------------------------
Three months ended Dec 31 Year ended Dec 31
------------------------------------------------------------------------
2004 2003 2004 2003
------------------------------------------------------------------------

------------------------------------------------------------------------
Revenue $4,449 $4,681 $18,965 $12,015
------------------------------------------------------------------------

------------------------------------------------------------------------
Expenses
------------------------------------------------------------------------
Operations 2,907 3,691 13,491 9,641
------------------------------------------------------------------------
General and administrative 152 277 553 794
------------------------------------------------------------------------
Financial items 90 30 182 30
------------------------------------------------------------------------
Cash flow from operations 1,300 683 4,739 1,550
------------------------------------------------------------------------
Depreciation and amortization 880 919 3,565 2,251
------------------------------------------------------------------------
Gain (loss) on sale of assets - (328) - (328)
------------------------------------------------------------------------
Future income tax (exp) recovery 302 (166) (213) 177
------------------------------------------------------------------------
Net earnings (loss) 118 (730) 961 (852)
------------------------------------------------------------------------

------------------------------------------------------------------------
Current assets 3,027 2,768
------------------------------------------------------------------------
Drilling rigs and related equipment 29,900 28,611
------------------------------------------------------------------------
Current liabilities 2,817 2,476
------------------------------------------------------------------------


Mexican Joint Venture

Drillers Technology de Mexico ("DTM") currently has two rigs drilling in
Chicontepec and six more rigs operating in Burgos under the new Burgos V
contract. The eight rigs achieved utilization rates of 86% during the
year ended December 31, 2004. Drilling 118 wells, the Joint Venture
accounted for 16% of the wells drilled in Mexico.

On December 21, 2004, DTM commenced drilling on the new Burgos V
contract. The Burgos V contract (previously referred to as the Burgos
350 contract), has a term of thirty months to June 2007, and includes a
substantial increase in day rates over the original Burgos contract. Rig
utilization, over the life of the contract, is expected to be 85% to 90%.

During the three months ended December 31, 2004, the Joint Venture
operated at 87% utilization and generated gross margins of $1,542 versus
88% utilization and gross margins of $990 for the fourth quarter of
2003. Cost control and a maturing operation have increased fourth
quarter 2004 gross margins to 35% from 21% in the fourth quarter 2003.
Gross margins for 2004 improved to 29% compared to 20% for the same
period in 2003.

The Chicontepec drilling program is now fourteen months ahead of
schedule. In September of 2004, two Chicontepec rigs were placed on
short-term standby and were paid standby rates approximate to operating
cash flow. These two rigs returned to active operations by the end of
November. The program will continue with only two rigs and two other
Chicontepec rigs have been moved to the Burgos field.

Wholly Owned Rigs

During the three months ended December 31, 2004, the six wholly owned
rigs operated at 44% utilization generating revenue of $4,531 compared
to rig utilization of 43% and revenue of $3,615 for the fourth quarter
2003.

In late November the Canadian winter season commenced and the
Corporations rig fleet experienced full utilization until break-up. In
Alaska, Rig 5 drilled on land during the summer of 2004 and moved to an
offshore platform in the Cook Inlet at year end. It operated 256 days
averaging 70 per cent utilization in 2004. Higher contributions from
Alaska and improved dayrates in Canada have enhanced operating margins.

The fourth quarter 2004 report to shareholders, including the
Corporation's consolidated financial statements and management
discussion and analysis will be posted to the Drillers Technology Corp.
website on March 31, 2004. Website: www.drillerstech.com / investor
relations

Certain statements contained in this press release, including statements
which are related to drilling activity and future profitability and
which may contain words such as "could", "should", "expect", "believe",
"will", and similar expressions and statements relating to matters that
are not historical facts are forward-looking statements. Such
forward-looking statements involve known and unknown risks and
uncertainties which may cause the actual results, performances or
achievements of Drillers Technology Corp. to be materially different
from any future results, performances or achievements expressed or
implied by such forward-looking statements. Such factors include
fluctuations in the market for oil and gas and related products and
services; competition; political and economic conditions in countries in
which Drillers Technology Corp. does business; the demand for services
provided by Drillers Technology Corp.; changes in laws and regulations,
including environmental, to which Drillers Technology Corp. is subject
and other factors.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Drillers Technology Corp.
    Ronald Gnyra
    President and Chief Executive Officer
    (403) 261-9877
    (403) 213-4860 (FAX)
    Website: www.drillerstech.com