BRNC Bronco Drilling Company, Inc. (MM)

Bronco Drilling Company, Inc., (Nasdaq/GS:BRNC), announced today financial and operational results for the three months ended March 31, 2011.

Consolidated Results

Revenues for the first quarter of 2011 were $37.0 million compared to $37.3 million for the fourth quarter of 2010 and $22.3 million for the first quarter of 2010. Net loss for the first quarter of 2011 was $7.4 million compared to a net loss of $2.5 million for the previous quarter and a net loss of $7.4 million for the first quarter of 2010. The Company’s fully diluted earnings per share for the quarter ended March 31, 2011, were a loss of $0.27 based on 27.5 million shares.

In the quarter the company recognized certain non-recurring charges related to the fluctuation in the fair value of a warrant in the amount of $10.3 million, a one-time charge related to the early extinguishment of debt in the amount of $2.0 million and a loss on sale and impairment of drilling rigs and related equipment of $1.9 million. Absent these non-recurring charges results from recurring items was a profit of $.05 per fully diluted share for the quarter.

Land Drilling

Average marketed land rigs for the first quarter of 2011 was 24 flat from the previous quarter and down from 37 for the first quarter of 2010. Revenue days for the quarter decreased to 2,088 from 2,152 for the previous quarter and increased from 1,428 for the first quarter of 2010. Utilization for the first quarter of 2011 was 96% compared to 96% for the previous quarter and 43% for the first quarter of 2010. Average daily cash margin for our land drilling fleet for the quarter ended March 31, 2011 was $6,324 compared to $6,008 for the previous quarter and $2,897 for the first quarter of 2010.

About Bronco Drilling

Bronco Drilling Company, Inc., a publicly held company headquartered in Edmond, Oklahoma, is a provider of contract land drilling 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)       March 31, December 31,   2011     2010   ASSETS (Unaudited)   CURRENT ASSETS Cash and cash equivalents $ 14,797 $ 11,854 Restricted cash - 2,700 Receivables Trade and other, net of allowance for doubtful accounts of $968 and $891 in 2011 and 2010, respectively 22,796 24,656 Affiliate receivables, net of allowance of $800 1,546 1,508 Unbilled receivables 856 428 Income tax receivable 5,671 5,700 Current deferred income taxes 2,558 2,765 Current maturities of note receivable from affiliate 1,639 1,607 Prepaid expenses   1,038     329     Total current assets 50,901 51,547   PROPERTY AND EQUIPMENT - AT COST Drilling rigs and related equipment 304,886 315,085 Transportation, office and other equipment   16,281     16,236   321,167 331,321 Less accumulated depreciation   104,093     105,242   217,074 226,079   OTHER ASSETS Investment in Challenger 38,730 38,730 Investment in Bronco MX 21,433 20,632 Debt issue costs and other 4,617 3,362 Non-current assets held for sale and discontinued operations   7,000     1,680   71,780 64,404     $ 339,755   $ 342,030     LIABILITIES AND STOCKHOLDERS' EQUITY   CURRENT LIABILITIES Accounts payable $ 8,674 $ 7,945 Accrued liabilities 8,757 7,847 Current maturities of long-term debt   96     95     Total current liabilities 17,527 15,887   LONG-TERM DEBT, less current maturities 4,150 6,730   WARRANT 14,690 4,407   DEFERRED INCOME TAXES 17,387 21,664  

COMMITMENTS AND CONTINGENCIES

  STOCKHOLDERS' EQUITY Common stock, $.01 par value, 100,000 shares authorized; 27,598 and 27,236 shares issued and outstanding at March 31, 2011 and December 31, 2010 276 277   Additional paid-in capital 309,874 310,580   Accumulated other comprehensive income 1,811 1,012   Retained earnings (Accumulated deficit)   (25,960 )   (18,527 ) Total stockholders' equity 286,001 293,342     $ 339,755   $ 342,030       Bronco Drilling Company, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts)     Three Months Ended March 31,   2011       2010   (Unaudited) REVENUES Contract drilling revenues $ 37,006 $ 22,295   EXPENSES Contract drilling 23,801 18,159 Depreciation and amortization 5,659 7,705 General and administrative 4,209 4,217 Loss (gain) on Bronco MX transaction - (1,058 ) Impairment of drilling rigs and related equipment 679 - Loss on sale of drilling rigs and related equipment   1,175     -     35,523     29,023     Income (loss) from continuing operations 1,483 (6,728 )   OTHER INCOME (EXPENSE) Interest expense (571 ) (1,456 )

Loss from extinguishment of debt

(1,975 ) - Interest income - 46 Equity in income (loss) of Challenger - (599 ) Equity in income (loss) of Bronco MX 1 (209 ) Other 25 48 Change in fair value of warrant   (10,283 )   272     (12,803 )   (1,898 ) Loss from continuing operations before income taxes (11,320 ) (8,626 ) Income tax benefit  

(3,981

)   (2,621 )   Loss from continuing operations

(7,339

) (6,005 ) Loss from discontinued operations, net of tax  

(94

)   (1,414 ) NET LOSS $ (7,433 ) $ (7,419 )   Loss per common share-Basic Continuing operations (0.27 ) (0.23 ) Discontinued operations   (0.00 )   (0.05 ) Loss per common share-Basic $ (0.27 ) $ (0.28 )   Loss per common share-Diluted Continuing operations (0.27 ) (0.23 ) Discontinued operations   (0.00 )   (0.05 ) Loss per common share-Diluted $ (0.27 ) $ (0.28 )   Weighted average number of shares outstanding-Basic   27,468     26,850     Weighted average number of shares outstanding-Diluted   27,468     26,850    

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, plus income tax expense, other expense, general and administrative expense and depreciation, amortization and impairment, and 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 important indicators of the operational strength of our business. A limitation of these metrics, however, is that they do 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 is not 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. These non-GAAP financial measures 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 March 31, December 31,   2011       2010     2010   (Unaudited) (Unaudited) Reconciliation of average daily cash margin to net loss: Net loss $ (7,433 ) $ (7,419 ) $ (2,497 ) Loss from discontinued operations, net of tax 94 1,414 233 Income tax benefit (3,981 ) (2,621 ) (1,047 ) General and administrative 4,209 4,217 4,176 Depreciation and amortization 5,659 7,705 5,933 Gain on Bronco MX transaction - (1,058 ) - Other and Non-Recurring   14,657     1,899     6,132     Drilling margin 13,205 4,137 12,930   Revenue days 2,088 1,428 2,152   Average daily cash margin $ 6,324   $ 2,897   $ 6,008