##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-KT
  (Mark one)o

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934orþ

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from
    April 1, 2007 to December 31,
    2007   Commission File
    Number: 1-8182
 PIONEER DRILLING
    COMPANY
 (Exact name of registrant as
    specified in its charter)
  TEXAS

74-2088619(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)1250 N.E. Loop 410, Suite 1000
    San Antonio, Texas(Address of principal
    executive offices)

78209(Zip Code)   Registrants telephone number, including area code:
    (210) 828-7689
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.10 par value

American Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-KT Form 10-KT. þ
  Rule 12b-2
  o þ o o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


2Item 1A.

Risk Factors


11Item 1B.

Unresolved Staff Comments


18Item 2.

Properties


19Item 3.

Legal Proceedings


19Item 4.

Submission of Matters to a Vote of Security
    Holders


19PART IIItem 5.

Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities


20Item 6.

Selected Financial Data


22Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


23Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


40Item 8.

Financial Statements and Supplementary Data


41Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


67Item 9A.

Controls and Procedures


67Item 9B.

Other Information


67PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


68Item 11.

Executive Compensation


68Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Relate Shareholder Matters


68Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


68Item 14.

Principal Accountant Fees and Services


68PART IVItem 15.

Exhibits and Financial Statement Schedules


68SubsidiariesConsent of Independent Registered Public Accounting FirmCertification of President & CEO Pursuant to Rule 13a-14(a)Certification of EVP & CFO Pursuant to Rule 13a-14(a)Certification of President & CEO Pursuant to Section 1350Certification of EVP & CFO Pursuant to Section 1350




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##### Table of Contents



PART I  INTRODUCTORY
    NOTE
  SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
    Form 10-KT
  
    general economic and business conditions and industry trends;
    the continued strength of the contract land drilling industry in
    the geographic areas where we operate;
    levels and volatility of oil and gas prices;
    decisions about onshore exploration and development projects to
    be made by oil and gas companies;
    the highly competitive nature of our business;
    the supply of marketable drilling rigs within the industry;
    the success or failure of our acquisition strategy, including
    our ability to finance acquisitions and manage growth;
    the continued availability of drilling rig components;
    our future financial performance, including availability, terms
    and deployment of capital;
    the continued availability of qualified personnel; and
    changes in, or our failure or inability to comply with,
    governmental regulations, including those relating to the
    environment.   1




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Item 1.
    Business  st st
  General
      Number ofDate

Acquisition(1)

Market

Rigs AcquiredSeptember 1999

Howell Drilling, Inc.


South Texas



2August 2000

Pioneer Drilling Co.


South Texas



4March 2001

Mustang Drilling, Ltd.


East Texas



4May 2002

United Drilling Company


South Texas



2August 2003

Texas Interstate Drilling Company, L. P.


North Texas



2March 2004

Sawyer Drilling & Service, Inc.


East Texas



7March 2004

SEDCO Drilling Co., Ltd.


North Texas



1November 2004

Wolverine Drilling, Inc.


Rocky Mountains



7December 2004

Allen Drilling Company


Western Oklahoma



5     (1)
    
    The August 2000 acquisition of Pioneer Drilling Co. involved our
    acquisition of all the outstanding capital stock of that entity.
    Each other acquisition reflected in this table involved our
    acquisition of assets from the indicated entity.   2




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Our
    Strategy
    
    continuing to own and operate a high-quality fleet of land
    drilling rigs;
    continuing to acquire or construct high-quality rigs capable of
    generating our targeted returns on investment;
    continuing to expand into active natural gas drilling markets
    and diversifying into more crude oil drilling markets;
    expanding into international markets, beginning with Colombia;
    expanding into other sectors within the oilfield services
    industry that compliment our contract drilling business;
    positioning ourselves to maximize rig utilization and dayrates;
    training and maintaining high-quality, experienced
    crews; and
    maintaining an aggressive safety program.     3




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Drilling
    Equipment
  General
           4




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Our Fleet
    of Drilling Rigs
    Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006


2005


2004


2003Average number of operating rigs for the period


66.6



60.8



52.3



40.1



27.3



22.3Average utilization rate


89
%


95
%


95
%


96
%


88
%


79
%       Drilling
    Contracts
    on-site
 5




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Nine MonthsEndedDecember 31,

Year Ended March 31,2007

2007

2006Daywork


606



742



565Turnkey


5



2



19Footage


66



60



106Total number of wells


677



804



690   Daywork Contracts.
  Turnkey Contracts.
    Footage Contracts.
 6




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Customers
    and Marketing
    Total Contract DrillingCustomer

Revenue PercentageNine Months Ended December 31, 2007:EOG Resources, Inc.


13.1
%Anadarko Petroleum Corporation(1)


8.8
%Chesapeake Operating Inc.


7.7
%Fiscal Year Ended March 31, 2007:EOG Resources, Inc.


9.7
%Chesapeake Operating Inc.


9.1
%Anadarko Petroleum Corporation(1)


6.1
%Fiscal Year Ended March 31, 2006:Chesapeake Operating Inc.


10.1
%Kerr-McGee Oil & Gas(1)


6.1
%Chinn Exploration


4.4
%     (1)
    
    Anadarko Petroleum Corporation acquired Kerr-McGee Oil and Gas
    in the year ended March 31, 2007.  well-by-well
      Competition
     7




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
    the type and condition of each of the competing drilling rigs;
    the mobility and efficiency of the rigs;
    the quality of service and experience of the rig crews;
    the safety records of the rigs;
    the offering of ancillary services; and
    the ability to provide drilling equipment adaptable to, and
    personnel familiar with, new technologies and drilling
    techniques.        
    better withstand industry downturns;
    compete more effectively on the basis of price and technology;
    better retain skilled rig personnel; and
    build new rigs or acquire and refurbish existing rigs so as to
    be able to place rigs into service more quickly than us in
    periods of high drilling demand.  Raw
    Materials
    Operating
    Risks and Insurance
    
    blowouts;
    fires and explosions;
    loss of well control; 8




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
    collapse of the borehole;
    lost or stuck drill strings; and
    damage or loss from natural disasters.    
    suspension of drilling operations;
    damage to, or destruction of, our property and equipment and
    that of others;
    personal injury and loss of life;
    damage to producing or potentially productive oil and gas
    formations through which we drill; and
    environmental damage.        Employees
     9




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Facilities
    
    a 15-acre
    division office, rig storage and maintenance yard in Corpus
    Christi, Texas;
    a 6-acre
    division office, storage and maintenance yard in Henderson,
    Texas;
    a 4-acre
    trucking department office, storage and maintenance yard in
    Kilgore, Texas;
    a 17-acre
    rig storage and maintenance yard in Woodward, Oklahoma;
    a 10-acre
    division office, rig storage and maintenance yard in Williston,
    North Dakota;
    a 5-acre
    division office, storage and maintenance yard in Paradise,
    Texas; and
    a 5-acre
    trucking department office, storage and maintenance yard in
    Springtown, Texas.    
    our corporate office facilities, at a cost escalating from
    $10,880 per month to $18,805 per month over 102 months,
    pursuant to a lease extending through December 2013;
    a trucking department office, storage and maintenance yard in
    Alice, Texas, at a cost of $5,200 per month, pursuant to a lease
    extending through July 2009;
    a 2.2-acre division office and storage yard in Vernal, Utah, at
    a cost escalating from $6,300 per month to $6,615 per month,
    pursuant to a lease extending through November 2009; and
    a marketing office in Denver Colorado, at a cost escalating from
    $1,092 to $1,217 per month, pursuant to a lease extending
    through June 2010.  Governmental
    Regulation
     10




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Available
    Information
  www.pioneerdrlg.com Form 10-K, Form 10-KT, Form 10-Q, Form 8-K www.sec.gov
  Item 1A.
    Risk
    Factors      Risks
    Relating to the Oil and Gas Industry
  We
    derive all our revenues from companies in the oil and gas
    exploration and production industry, a historically cyclical
    industry with levels of activity that are significantly affected
    by the levels and volatility of oil and gas
    prices.
    
    our revenues, cash flows and profitability;
    the fair market value of our rig fleet;
    our ability to maintain or increase our borrowing capacity; 11




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
    our ability to obtain additional capital to finance our business
    and make acquisitions, and the cost of that capital; and
    our ability to retain skilled rig personnel whom we would need
    in the event of an upturn in the demand for our services.    
    the cost of exploring for, producing and delivering oil and gas;
    the discovery rate of new oil and gas reserves;
    the rate of decline of existing and new oil and gas reserves;
    available pipeline and other oil and gas transportation capacity;
    the ability of oil and gas companies to raise capital;
    economic conditions in the United States and elsewhere;
    actions by OPEC, the Organization of Petroleum Exporting
    Countries;
    political instability in the Middle East and other major oil and
    gas producing regions;
    governmental regulations, both domestic and foreign;
    domestic and foreign tax policy;
    weather conditions in the United States and elsewhere;
    the pace adopted by foreign governments for the exploration,
    development and production of their national reserves;
    the price of foreign imports of oil and gas; and
    the overall supply and demand for oil and gas.  Risks
    Relating to Our Business
  Reduced
    demand for or excess capacity of drilling rigs can adversely
    affect our profitability.
    Our
    acquisition strategy exposes us to various risks, including
    those relating to difficulties in identifying suitable
    acquisition opportunities and integrating businesses, assets and
    personnel, as well as difficulties in obtaining financing for
    targeted acquisitions and the potential for increased leverage
    or debt service requirements.
    
    unanticipated costs and assumption of liabilities and exposure
    to unforeseen liabilities of acquired businesses, including
    environmental liabilities;
    difficulties in integrating the operations and assets of the
    acquired business and the acquired personnel; 12




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
    limitations on our ability to properly assess and maintain an
    effective internal control environment over an acquired
    business, in order to comply with applicable periodic reporting
    requirements;
    potential losses of key employees and customers of the acquired
    businesses;
    risks of entering markets in which we have limited prior
    experience; and
    increases in our expenses and working capital requirements.          We
    operate in a highly competitive, fragmented industry in which
    price competition could reduce our profitability.
      
    the type and condition of each of the competing drilling rigs;
    the mobility and efficiency of the rigs;
    the quality of service and experience of the rig crews;
    the safety records of the rigs;
    the offering of ancillary services; and
    the ability to provide drilling equipment adaptable to, and
    personnel familiar with, new technologies and drilling
    techniques.   13




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We
    face competition from many competitors with greater
    resources.
    
    better withstand industry downturns;
    compete more effectively on the basis of price and technology;
    retain skilled rig personnel; and
    build new rigs or acquire and refurbish existing rigs so as to
    be able to place rigs into service more quickly than us in
    periods of high drilling demand.  Unexpected
    cost overruns on our turnkey drilling jobs and our footage
    contracts could adversely affect our financial position and our
    results of operations.
      Our
    operations involve operating hazards, which, if not insured or
    indemnified against, could adversely affect our results of
    operations and financial condition.
    
    blowouts;
    fires and explosions;
    loss of well control; 14




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
    collapse of the borehole;
    lost or stuck drill strings; and
    damage or loss from natural disasters. Any of these hazards can
    result in substantial liabilities or losses to us from, among
    other things:
    suspension of drilling operations;
    damage to, or destruction of, our property and equipment and
    that of others;
    personal injury and loss of life;
    damage to producing or potentially productive oil and gas
    formations through which we drill; and
    environmental damage.    We
    face increased exposure to operating difficulties because we
    primarily focus on drilling for natural gas.
    Our
    current primary focus on drilling for natural gas could place us
    at a competitive disadvantage if we were to change our primary
    focus to drilling for oil.
   15




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Our
    international operations are subject to political, economic and
    other uncertainties not encountered in our domestic
    operations.
    
    risks of war, terrorism, civil unrest and kidnapping of
    employees;
    expropriation, confiscation or nationalization of our assets;
    renegotiation or nullification of contracts;
    foreign taxation;
    the inability to repatriate earnings or capital, due to laws
    limiting the right and ability of foreign subsidiaries to pay
    dividends and remit earnings to affiliated companies;
    changing political conditions and changing laws and policies
    affecting trade and investment;
    regional economic downturns;
    the overlap of different tax structures;
    the burden of complying with multiple and potentially
    conflicting laws;
    the risks associated with the assertion of foreign sovereignty
    over areas in which our operations are conducted;
    difficulty in collecting international accounts
    receivable; and
    potentially longer payment cycles.    Our
    operations are subject to various laws and governmental
    regulations that could restrict our future operations and
    increase our operating costs.
    
    environmental quality;
    pollution control;
    remediation of contamination;
    preservation of natural resources; and
    worker safety.   16




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We
    could be adversely affected if shortages of equipment, supplies
    or personnel occur.
     17




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Risks
    Relating to Our Capitalization and Organizational
    Documents
  We do
    not intend to pay dividends on our common stock in the
    foreseeable future, and therefore only appreciation of the price
    of our common stock will provide a return to our
    shareholders.
    We may
    issue preferred stock whose terms could adversely affect the
    voting power or value of our common stock.
    Provisions
    in our organizational documents could delay or prevent a change
    in control of our company, even if that change would be
    beneficial to our shareholders.
    
    provisions regulating the ability of our shareholders to
    nominate candidates for election as directors or to bring
    matters for action at annual meetings of our shareholders;
    limitations on the ability of our shareholders to call a special
    meeting and act by written consent;
    provisions dividing our board of directors into three classes
    elected for staggered terms; and
    the authorization given to our board of directors to issue and
    set the terms of preferred stock.  Item 1B.
    Unresolved
    Staff Comments   18




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Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   19




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Shareholder Matters
    and Issuer Purchases of Equity Securities      Low


HighNine Months Ended December 31, 2007:First Quarter

$
12.69


$
16.00Second Quarter


11.81



14.88Third Quarter


11.49



12.49Fiscal Year Ended March 31, 2007:First Quarter

$
12.60


$
18.00Second Quarter


10.79



15.70Third Quarter


11.57



14.65Fourth Quarter


11.46



13.47Fiscal Year Ended March 31, 2006:First Quarter

$
10.57


$
16.30Second Quarter


14.00



19.93Third Quarter


14.25



19.98Fourth Quarter


13.10



23.06        20




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Performance
    Graph
      Comparison
    of 5 Year Cumulative Total Return
    Assumes Initial Investment of $100
    December 2007
  
 21




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Equity
    Compensation Plan Information
    Number of securitiesremaining available forNumber of securities to be

Weighted-average

future issuance under equityissued upon exercise of

exercise price per share

compensation plansoutstanding options,

of outstanding options,

(excluding securitiesPlan category

warrants and rights

warrants and rights

reflected in column (a))(a)

(b)

(c)Equity compensation plans approved by security holders


2,800,499



10.87



3,351,834Equity compensation plans not approved by security holdersTotal


2,800,499



10.87



3,351,834   Item 6.
    Selected
    Financial Data    Nine MonthsEndedDecember 31,

Years Ended March 31,2007

2007

2006

2005

2004(In thousands, except per share amounts)Contract drilling revenues


313,884



416,178



284,148



185,246



107,876Income from operations


55,260



126,976



77,909



18,774



438Income (loss) before income taxes


57,774



130,789



79,813



17,161



(2,216
)Net earnings (loss) applicable to common stockholders


39,645



84,180



50,567



10,812



(1,790
)Earnings (loss) per common share-basic


0.80



1.70



1.08



0.31



(0.08
)Earnings (loss) per common share-diluted


0.79



1.68



1.06



0.30



(0.08
)Long-term debt and capital lease obligations, excluding current
    installments














13,445



44,892Shareholders equity


471,072



428,109



340,676



221,615



70,836Total assets


560,212



501,495



400,678



276,009



143,731Capital expenditures


128,038



147,230



128,871



80,388



44,845  22




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Statements we make in the following discussion 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 the following discussion as
    a result of a variety of factors, including general economic and
    business conditions and industry trends, the continued strength
    or weakness of the contract land drilling industry in the
    geographic areas in which we operate, decisions about onshore
    exploration and development projects to be made by oil and gas
    companies, the highly competitive nature of our business, the
    availability, terms and deployment of capital, the availability
    of qualified personnel, and changes in, or our failure or
    inability to comply with, government regulations, including
    those relating to the environment. We have discussed many of
    these factors in more detail elsewhere in this report, including
    under the headings Special Note Regarding Forward-Looking
    Statements in the Introductory Note to Part I and
    Risk Factors in Item 1A. These factors are not
    necessarily all the important factors that could affect us.
    Unpredictable or unknown factors we have not discussed in this
    report or 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.
  Company
    Overview
       23




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on-site
      Nine Months Ended December 31,


Years Ended March 31,2007


2006


2007


2006


2005Utilization Rates


89
%


97
%


95
%


95
%


96
%Revenue Days


16,289



15,727



20,930



18,164



13,894Average number of operating rigs during the period


66.7



59.6



60.8



52.3



40.1        24




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##### Table of Contents



Market
    Conditions in Our Industry
        st
  Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006


2005


2004


2003Oil (West Texas Intermediate)

$
77.42


$
64.96


$
59.94


$
45.04


$
31.47


$
29.27Natural Gas (Henry Hub)

$
6.82


$
6.53


$
9.10


$
5.99


$
5.27


$
4.24U.S. Land Rig Count


1,684



1,589



1,329



1,110



964



723     Critical
    Accounting Policies and Estimates
  Revenue and cost recognition
  81-1, work-in-progress work-in-progress
 25




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work-in-progress work-in-progress
        Asset impairments
  Deferred taxes
 26




---



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Accounting estimates
      15-day
   27




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Liquidity
    and Capital Resources
  Sources
    of Capital Resources
       28




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##### Table of Contents



Uses
    of Capital Resources
    Nine MonthsEnded


Year EndedDecember 31, 2007


March 31, 2007(In thousands)Drilling rigs

$
59,582


$
74,457Other drilling equipment


64,767



63,660Transportation equipment


3,057



7,597Other


632



1,516$
128,038


$
147,230         Working
    Capital
     29




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December 31, 2007


March 31, 2007


Change(In thousands)Cash and cash equivalents

$
76,703


$
84,945


$
(8,242
)Trade receivables, net


46,759



54,206



(7,447
)Contract drilling in progress


7,861



9,837



(1,976
)Income tax receivable


611



3,492



(2,881
)Deferred income taxes


3,670



2,175



1,495Inventory


1,180







1,180Prepaid expenses


5,073



3,653



1,420Current assets


141,857



158,308



(16,451
)Accounts payable


21,424


$
18,626



2,798Prepaid drilling contracts


1,933







1,933Accrued payroll and related employee costs


5,172



7,086



(1,914
)Accrued insurance premiums and deductibles


9,548



6,754



2,794Other accrued expenses


3,973



1,753



2,220Current liabilities


42,050



34,219



7,831Working capital

$
99,807


$
124,089


$
(24,282
)                30




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##### Table of Contents



Long-term
    Debt
    Contractual
    Obligations
    Payments Due by PeriodContractual




Less than 1


1-3


4-5


More than 5Obligations

Total


year


years


years


years(In thousands)Purchase Obligations

$
3,690


$
3,690


$



$



$
Operating Lease Obligations


1,605



371



573



437



224Total

$
5,295


$
4,061


$
573


$
437


$
224   Debt
    Requirements
      
    our failure to make required payments;
    any sale of assets by us not permitted by the credit facility;
    our failure to comply with financial covenants related to a debt
    to total capitalization ratio not to exceed 0.2 to 1, an
    operating leverage ratio of not more than 2.5 to 1, and a fixed
    charge coverage ratio of not less than 1.5 to 1;
    our incurrence of additional indebtedness in excess of
    $3.0 million, to the extent not otherwise allowed by the
    credit facility; 31




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
    any event which results in a change in the ownership of at least
    40% of all classes of our outstanding capital stock; and
    any payment of cash dividends on our common stock.    Results
    of Operations
    Daywork Contracts.
  Turnkey Contracts.
  Footage Contracts.
     32




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Nine Months Ended


Years EndedDecember 31,


March 31,2007


2006


2007


2006Daywork Contracts


93
%


97
%


96
%


89
%Turnkey Contracts


2
%






1
%


4
%Footage Contracts


5
%


3
%


3
%


7
%    33




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##### Table of Contents



Statements
    of Operations Analysis  Nine Months Ended
    December 31, 2007 Compared with the Nine Months Ended
    December 31, 2006
    Nine Months EndedDecember 31,2007


2006(In thousands)Contract drilling revenues:Daywork contracts

$
292,617


$
302,272Turnkey contracts


4,979



Footage contracts


16,288



10,559Total contract drilling revenues

$
313,884


$
312,831Contract drilling costs:Daywork contracts

$
179,521


$
156,479Turnkey contracts


3,168



Footage contracts


12,907



7,538Total contract drilling costs

$
195,596


$
164,017Drilling margin:Daywork contracts

$
113,096


$
145,793Turnkey contracts


1,811



Footage contracts


3,381



3,021Total drilling margin

$
118,288


$
148,814Revenue days by type of contract:Daywork contracts


15,203



15,084Turnkey contracts


118



Footage contracts


968



643Total revenue days


16,289



15,727EBITDA

$
104,241


$
139,548Contract drilling revenue per revenue day

$
19,270


$
19,891Contract drilling costs per revenue day

$
12,008


$
10,429Drilling margin per revenue day

$
7,262


$
9,462Rig utilization rates


89
%


97
%Average number of rigs during the period


66.7



59.6  34




---



##### Table of Contents



Nine Months EndedDecember 31,2007


2006(In thousands)Reconciliation of drilling margin and EBITDA to net earnings:Drilling margin

$
118,288


$
148,814General and administrative expense


(11,564
)


(8,516
)Bad debt expense


(2,612
)


(800
)Other income


129



50EBITDA


104,241



139,548Income tax expense


(18,129
)


(37,341
)Interest income (expense), net


2,385



2,874Depreciation and amortization


(48,852
)


(38,120
)Net earnings

$
39,645


$
66,961          35




---



##### Table of Contents



day-to-day day-to-day clean-up
   36




---



##### Table of Contents



Statements
    of Operations Analysis  Year Ended March 31,
    2007 Compared to the Year Ended March 31,
    2006
    Years Ended March 31,2007


2006(In thousands)Contract drilling revenues:Daywork contracts

$
399,188


$
252,103Turnkey contracts


3,445



10,830Footage contracts


13,545



21,215Total contract drilling revenues

$
416,178


$
284,148Contract drilling costs:Daywork contracts

$
211,334


$
143,130Turnkey contracts


2,615



7,449Footage contracts


10,474



15,632Total contract drilling costs

$
224,423


$
166,211Drilling margin:Daywork contracts

$
187,854


$
108,973Turnkey contracts


830



3,381Footage contracts


3,071



5,583Total drilling margin

$
191,755


$
117,937Revenue days by type of contract:Daywork contracts


19,995



16,138Turnkey contracts


81



558Footage contracts


854



1,468Total revenue days


20,930



18,164EBITDA

$
179,890


$
111,368Contract drilling revenue per revenue day

$
19,884


$
15,643Contract drilling costs per revenue day

$
10,723


$
9,151Drilling margin per revenue day

$
9,162


$
6,493Rig utilization rates


95
%


95
%Average number of rigs during the period


60.8



52.3  37




---



##### Table of Contents



Years Ended March 31,2007


2006(In thousands)Reconciliation of drilling margin and EBITDA to net earnings:Drilling margin

$
191,755


$
117,937General and administrative expense


(11,123
)


(6,792
)Bad debt (expense) recovery


(800
)


152Other income


58



71EBITDA


179,890



111,368Income tax expense


(46,609
)


(29,247
)Interest income (expense), net


3,755



1,833Depreciation and amortization


(52,856
)


(33,388
)Net earnings

$
84,180


$
50,566              38




---



##### Table of Contents



Inflation
      Off-Balance
    Sheet Arrangements
    Recently
    Issued Accounting Standards
  Accounting for Uncertainty
    in Income Taxes  An Interpretation of FASB Statement
    No. 109
  Fair Value Measurements FAS No. 157-2, Effective Dates of FASB Statement No. 157,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
 39




---



##### Table of Contents



Noncontrolling interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51
  Business Combinations Accounting for Costs
    Associated with Exit or Disposal Activities Accounting for Contingencies
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
    Foreign
    Currency Risk
       40




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  PIONEER
    DRILLING COMPANY
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReports of Independent Registered Public
    Accounting Firm


42Consolidated Balance Sheets as of
    December 31, 2007 and March 31, 2007


44Consolidated Statements of Operations for the
    Nine Months Ended December 31, 2007 and the  Years Ended
    March 31, 2007, and 2006


45Consolidated Statements of Shareholders
    Equity and Comprehensive Income for the  Nine Months Ended
    December 31, 2007 and the Years Ended March 31, 2007,
    and 2006


46Consolidated Statements of Cash Flows for the
    Nine Months Ended December 31, 2007 and the  Years Ended
    March 31, 2007, and 2006


47Notes to Consolidated Financial Statements


48  41




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                KPMG
    LLP
    42




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm              two-year
   KPMG
    LLP
    43




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEET
  December 31,


March 31,2007


2007(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
76,703


$
84,945Receivables:Trade, net


46,759



54,206Contract drilling in progress


7,861



9,837Income tax receivable


611



3,492Deferred income taxes


3,670



2,175Inventory


1,180



Prepaid expenses


5,073



3,653Total current assets


141,857



158,308Property and equipment, at cost:Drilling rigs and equipment


553,864



441,072Transportation equipment


18,676



15,941Land, buildings and other


6,157



5,736578,697



462,749Less accumulated depreciation and amortization


161,675



119,848Net property and equipment


417,022



342,901Deferred income taxes


573



Intangible and other assets


760



286Total assets

$
560,212


$
501,495LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
21,424


$
18,626Prepaid drilling contracts


1,933



Accrued expenses:Payroll and related employee costs


5,172



7,086Insurance premiums and deductibles


9,548



6,754Other


3,973



1,753Total current liabilities


42,050



34,219Non-current liabilities


254



346Deferred income taxes


46,836



38,821Total liabilities


89,140



73,386Commitments and contingenciesShareholders equity:Preferred stock, 10,000,000 shares authorized; none issued
    and outstanding






Common stock $.10 par value; 100,000,000 shares
    authorized; 49,650,978 shares and 49,628,478 shares
    issued and outstanding at December 31, 2007 and
    March 31, 2006, respectively


4,965



4,963Additional paid-in capital


294,922



291,607Accumulated earnings


171,185



131,539Total shareholders equity


471,072



428,109Total liabilities and shareholders equity

$
560,212


$
501,495    44




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006(In thousands, except per share data)Contract drilling revenues

$
313,884


$
416,178


$
284,148Costs and expenses:Contract drilling


195,596



224,423



166,211Depreciation and amortization


48,852



52,856



33,388General and administrative


11,564



11,123



6,792Bad debt expense (recovery)


2,612



800



(152
)Total operating costs and expenses


258,624



289,202



206,239Income from operations


55,260



126,976



77,909Other income (expense):Interest expense


(16
)


(73
)


(236
)Interest income


2,401



3,828



2,069Other


129



58



71Total other income


2,514



3,813



1,904Income before income taxes


57,774



130,789



79,813Income tax expense


(18,129
)


(46,609
)


(29,247
)Net earnings

$
39,645


$
84,180


$
50,566Earnings per common share  Basic

$
0.80


$
1.70


$
1.08Earnings per common share  Diluted

$
0.79


$
1.68


$
1.06Weighted average number of shares outstanding  Basic


49,645



49,603



46,808Weighted average number of shares outstanding  Diluted


50,201



50,132



47,506    45




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE
    INCOME
  Additional





TotalShares


Amount


Paid In


Accumulated


ShareholdersCommon


Common


Capital


Earnings (Deficit)


Equity(In thousands)Balance as of March 31, 2005


45,893


$
4,589


$
220,232


$
(3,206
)

$
221,615Comprehensive income:Net earnings














50,567



50,567Total comprehensive income


















50,567Issuance of common stock for:Sale, net of related expenses of $968


3,000



300



61,402







61,702Exercise of options and related income tax benefits of $4,010


699



70



6,722







6,792Balance as of March 31, 2006


49,592



4,959



288,356



47,361



340,676Comprehensive income:Net earnings














84,179



84,179Total comprehensive income


















84,179Issuance of common stock for:Exercise of options and related income tax benefits of $24


37



4



190







194Stock-based compensation expense










3,061







3,061Balance as of March 31, 2007


49,629



4,963



291,607



131,540



428,110Comprehensive income:Net earnings














39,645



39,645Total comprehensive income


















39,645Issuance of common stock for:Exercise of options and related income tax benefits of $54


22



2



158







160Stock-based compensation expense










3,157







3,157Balance as of December 31, 2007


49,651


$
4,965


$
294,922


$
171,185


$
471,072    46




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##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006(In thousands)Cash flows from operating activities:Net earnings

$
39,645


$
84,180


$
50,566Adjustments to reconcile net earnings to net cash provided by
    operating activities:Depreciation and amortization


48,852



52,856



33,388Allowance for doubtful accounts


2,612



800



(152
)Loss on dispositions of property and equipment


2,809



5,760



2,895Stock-based compensation expense


3,157



3,061



Deferred income taxes


5,947



10,653



14,279Change in other assets


(519
)


20



209Change in non-current liabilities


(92
)


(41
)


(12
)Changes in current assets and liabilities:Receivables


9,692



(23,170
)


(13,540
)Inventory


(1,180
)






Prepaid expenses


(1,420
)


(1,445
)


(331
)Accounts payable


919



(137
)


419Income tax payable






(6,843
)


6,639Prepaid drilling contracts


1,933



(140
)


(33
)Accrued expenses


3,100



5,976



2,757Net cash provided by operating activities


115,455



131,530



97,084Cash flows from financing activities:Proceeds from exercise of options


107



174



6,792Proceeds from common stock, net of offering cost of $968 in 2006










61,702Payments of debt










(18,860
)Excess tax benefit of stock option exercises


54



27



Net cash provided by financing activities


161



201



49,634Cash flows from investing activities:Purchases of property and equipment


(126,158
)


(144,507
)


(128,871
)Proceeds from sale (purchase) of marketable securities, net










1,000Proceeds from sale of property and equipment


2,300



6,547



2,654Net cash used in investing activities


(123,858
)


(137,960
)


(125,217
)Net increase (decrease) in cash and cash equivalents


(8,242
)


(6,229
)


21,501Beginning cash and cash equivalents


84,945



91,174



69,673Ending cash and cash equivalents

$
76,703


$
84,945


$
91,174Supplementary disclosure:Interest paid

$
15


$
104


$
407Income tax paid

$
9,473


$
46,258


$
4,322Tax benefit from exercise of nonqualified options

$



$



$
4,010    47




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Organization
    and Summary of Significant Accounting Policies  Business
    and Principles of Consolidation
    st st
    Drilling
    Contracts
  on-site
  Income
    Taxes
   48




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Earnings
    Per Common Share
    Stock-based
    Compensation
  Share-Based Payment , Accounting for Stock Issued to
    Employees , Accounting for Stock-Based Compensation
    Net earnings  as reported

$
50,566Deduct: Total stock-based employee compensation expense
    determined under fair-value-based method for all awards, net of
    related tax effect


(1,894
)Net earnings  pro forma

$
48,672Net earnings per share  as reported  basic

$
1.08Net earnings per share  as reported 
    diluted

$
1.06Net earnings per share  pro forma  basic

$
1.04Net earnings per share  pro forma  diluted

$
1.02    49




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Revenue
    and Cost Recognition
    81-1, work-in-progress work-in-progress
  work-in-progress quantum meruit work-in-progress
   50




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Foreign
    Currencies
    Cash
    and Cash Equivalents
    Trade
    Accounts Receivable
    Prepaid
    Expenses
    Inventories
   51




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Property
    and Equipment
        Intangibles
    and Other Assets
    Derivative
    Instruments and Hedging Activities
    Related-Party
    Transactions
    Recently
    Issued Accounting Standards
  Accounting for Uncertainty
    in Income Taxes  An Interpretation of FASB Statement
    No. 109
 52




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Fair Value Measurements FAS No. 157-2, Effective Dates of FASB Statement No. 157,
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  Noncontrolling interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51
  Business Combinations Accounting for Costs
    Associated with Exit or Disposal Activities
 53




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Accounting for Contingencies
  Reclassifications
    2.
    Long-term
    Debt, Subordinated Debt and Note Payable        3.
    Leases    
    our corporate office facilities, at a cost escalating from
    $10,880 per month to $18,805 per month over 102 months,
    pursuant to a lease extending through December 2013;
    a trucking department office, storage and maintenance yard in
    Alice, Texas, at a cost of $5,200 per month, pursuant to a lease
    extending through July 2009;
    a 2.2-acre division office and storage yard in Vernal, Utah, at
    a cost escalating from $6,300 per month to $6,615 per month,
    pursuant to a lease extending through November 2009; and 54




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   
    a marketing office in Denver Colorado, at a cost escalating from
    $1,092 to $1,217 per month, pursuant to a lease extending
    through June 2010.      Years EndedDecember 31,2008

$
3712009


3462010


2272011


2172012


220Thereafter


224$
1,605   4.
    Income
    Taxes    Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006Domestic

$
55,752


$
130,789


$
79,813Foreign


2,022







Income before income tax

$
57,774


$
130,789


$
79,813     Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006Current tax:Federal

$
10,587


$
34,252


$
14,266State


1,593



1,704



701Foreign










12,180



35,956



14,967Deferred taxes:Federal


6,533



9,195



13,967State


(100
)


1,458



313Foreign


(484
)






5,949



10,653



14,280Income tax expense

$
18,129


$
46,609


$
29,247  55




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006Expected tax expense

$
20,221


$
45,776


$
27,935State income taxes


971



2,417



659Incentive stock options


538



547



Tax basis adjustment to 35%










814Tax benefits in foreign jurisdictions


(1,191
)






Domestic production activities deduction


(729
)


(1,388
)


Tax-exempt interest income


(475
)


(422
)


Non deductible items for tax purposes


61



48



32Uncertain tax positions


(717
)


(372
)


(198
)Other


(550
)


3



5$
18,129


$
46,609


$
29,247     Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006Results of operations

$
18,129


$
46,609


$
29,247Stockholders equity


(54
)


(24
)


(4,010
)$
18,075


$
46,585


$
25,237  56




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,


March 31,2007


2007Deferred tax assets:Employee benefits accrual

$
3,292


$
1,821Accounts receivable reserve






354Employee stock based compensation


1,095



510Accrued expenses not deductible for tax purposes


498



58Accrued revenue not income for book purposes


613



Foreign net operating loss carryforward


3,637



9,135



2,743Valuation allowance


(3,997
)


Total deferred tax assets


5,138



2,743Deferred tax liabilities:Property and equipment


47,731



38,672Other






717Total deferred tax liabilities


47,731



39,389Net deferred tax liabilities

$
42,593


$
36,646        57




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Beginning balance at April 1, 2007

$
717Additions to current year tax positions


Additions for prior year tax positions


Reductions for prior year tax positions


Settlements


(717
)Ending balance at December 31, 2007

$
     5.
    Fair
    Value of Financial Instruments    6.
    Earnings
    Per Common Share    Nine MonthsEndedDecember 31,


Years Ended March 31,2007


2007


2006BasicNet earnings

$
39,645


$
84,180


$
50,566Weighted average shares


49,645



49,603



46,808Earnings per share

$
0.80


$
1.70


$
1.08DilutedNet earnings

$
39,645


$
84,180


$
50,566Effect of dilutive securities










Net earnings available to common shareholders after
    assumed conversion

$
39,645


$
84,180


$
50,566Weighted average shares:Outstanding


49,645



49,603



46,808Options


556



529



69850,201



50,132



47,506Earnings per share

$
0.79


$
1.68


$
1.06  58




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  7.
    Equity
    Transactions      8.
    Stock
    Option Plans      Nine MonthsEndedDecember 31,

Fiscal Years Ended March 31,2007

2007

2006Expected volatility


46
%


49
%


52
%Weighted-average risk-free interest rates


4.7
%


5.0
%


4.0
%Weighted-average expected life in years


4.00



2.86



4.10Weighted-average grant-date fair value

$
5.84


$
5.36


$
6.47      59




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Weighted-AverageNumber of


Weighted-Average


RemainingShares


Exercise Price


Contract LifeOutstanding options as of March 31, 2006


1,592,833


$
7.71Granted


482,000



14.53Exercised


(36,500
)


4.63Canceled






Forfeited


(91,833
)


11.09Outstanding options as of March 31, 2007


1,946,500


$
9.29Granted


931,500



14.06Exercised


(22,500
)


4.74Canceled






Forfeited


(55,001
)


11.73Outstanding options as of December 31, 2007


2,800,499


$
10.87



7.23Options exercisable as of December 31, 2007


1,296,658


$
8.64



5.68       Weighted-AverageNumber of


Grant-DateShares


Fair ValueNonvested options as of March 31, 2006


1,046,167


$
4.90Granted


422,000



5.51Vested


(495,668
)


4.70Forfeited


(91,833
)


5.88Nonvested options as of March 31, 2007


880,666


$
5.48Granted


931,500



5.84Vested


(253,324
)


5.49Forfeited


(55,001
)


5.89Nonvested options as of December 31, 2007


1,503,841


$
5.64   9.
    Employee
    Benefit Plans and Insurance   60




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      10.
    Business
    Segments and Concentrations      11.
    Commitments
    and Contingencies      12.
    Subsequent
    Events   61




---



##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      13.
    Quarterly
    Results of Operations (unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


TotalNine Months Ended December 31, 2007Revenues

$
102,779


$
106,516


$
104,589






$
313,884Income from operations


19,569



17,307



18,384







55,260Income tax expense


(7,362
)


(6,255
)


(4,512
)






(18,129
)Net earnings


13,088



11,780



14,777







39,645Earnings per share:Basic


.26



.24



.30







.80Diluted


.26



.23



.29







.79Year Ended March 31, 2007Revenues

$
93,493


$
106,917


$
112,421


$
103,347


$
416,178Income from operations


29,455



35,674



36,250



25,597



126,976Income tax expense


(11,026
)


(13,213
)


(13,102
)


(9,268
)


(46,609
)Net earnings


19,486



23,486



23,988



17,219



84,179Earnings per share:Basic


.39



.47



.48



.36



1.70Diluted


.39



.47



.48



.34



1.68  62




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##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  14.
    Change in
    Fiscal Year End and Comparative Financial Information     63




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##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands, except per share data)
  December 31,


December 31,2007


2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
76,703


$
74,754Receivables:Trade, net


46,759



55,677Contract drilling in progress


7,861



14,006Income tax receivable


611



Deferred income taxes


3,670



1,754Inventory


1,180



Prepaid expenses


5,073



4,027Total current assets


141,857



150,218Property and equipment, at cost:Drilling rigs and equipment


553,864



424,875Transportation equipment


18,676



11,790Land, buildings and other


6,157



4,457578,697



441,122Less accumulated depreciation and amortization


161,675



111,473Net property and equipment


417,022



329,649Deferred income taxes


573



Intangible and other assets


760



306Total assets

$
560,212


$
480,173LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
21,424


$
19,639Income tax payable






3,791Prepaid drilling contracts


1,933



Accrued expenses:Payroll and related employee costs


5,172



5,387Insurance premiums and deductibles


9,548



5,874Other


3,973



2,655Total current liabilities


42,050



37,346Non-current liabilities


254



432Deferred income taxes


46,836



32,221Total liabilities


89,140



69,999Commitments and contingenciesShareholders equity:Preferred stock, 10,000,000 shares authorized; none issued
    and outstanding






Common stock $.10 par value; 100,000,000 shares
    authorized; 49,650,978 shares and 49,604,478 shares
    issued and outstanding at December 31, 2007 and 2006,
    respectively


4,965



4,960Additional paid-in capital


294,922



290,893Accumulated earnings


171,185



114,321Total shareholders equity


471,072



410,174Total liabilities and shareholders equity

$
560,212


$
480,173  64




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##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (In
    thousands, except per share data)
  Nine Months EndedDecember 31,2007


2006(Unaudited)Contract drilling revenues

$
313,884


$
312,831Costs and expenses:Contract drilling


195,596



164,017Depreciation and amortization


48,852



38,120General and administrative


11,564



8,516Bad debt expense


2,612



800Total operating costs and expenses


258,624



211,453Income from operations


55,260



101,378Other income (expense):Interest expense


(16
)


(73
)Interest income


2,401



2,947Other


129



50Total other income


2,514



2,924Income before income taxes


57,774



104,302Income tax expense


(18,129
)


(37,341
)Net earnings

$
39,645


$
66,961Earnings per common share  Basic

$
0.80


$
1.35Earnings per common share  Diluted

$
0.79


$
1.34Weighted average number of shares outstanding  Basic


49,645



49,598Weighted average number of shares outstanding  Diluted


50,201



50,148  65




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##### Table of Contents



PIONEER
    DRILLING COMPANY AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands)
  Nine Months EndedDecember 31,2007


2006(Unaudited)Cash flows from operating activities:Net earnings

$
39,645


$
66,961Adjustments to reconcile net earnings to net cash provided by
    operating activities:Depreciation and amortization


48,852



38,120Allowance for doubtful accounts


2,612



800Loss on dispositions of property and equipment


2,809



5,183Stock-based compensation expense


3,157



2,474Deferred income taxes


5,947



4,474Change in other assets


(519
)


15Change in non-current liabilities


(92
)


44Changes in current assets and liabilities:Receivables


9,692



(25,318
)Inventory


(1,180
)


Prepaid expenses


(1,420
)


(1,819
)Accounts payable


919



3,033Income tax payable






(3,051
)Prepaid drilling contracts


1,933



(140
)Accrued expenses


3,100



4,300Net cash provided by operating activities


115,455



95,076Cash flows from financing activities:Proceeds from exercise of options


107



64Excess tax benefit of stock option exercises


54



8Net cash provided by financing activities


161



72Cash flows from investing activities:Purchases of property and equipment


(126,158
)


(116,638
)Proceeds from sale of property and equipment


2,300



5,070Net cash used in investing activities


(123,858
)


(111,568
)Net increase (decrease) in cash and cash equivalents


(8,242
)


(16,420
)Beginning cash and cash equivalents


84,945



91,174Ending cash and cash equivalents

$
76,703


$
74,754  66




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rules 13a-15 15d-15,
    Managements
    Report on Internal Control Over Financial Reporting
      Form 10-KT,
  Item 9B.
    Other
    Information   67




---



##### Table of Contents



PART III    Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (1) Financial Statements.
    (2) Financial Statement Schedules:
   68




---



##### Table of Contents



Schedule II
  Valuation and Qualifying AccountsBalance


Chargedat


to Costs


Additions to/


BalanceBeginning


and


Deductions from


atof Year


Expenses


Accounts


Year End(In thousands)Year ended March 31, 2006Allowance for doubtful receivables

$
352


$
(152
)

$



$
200Year ended March 31, 2007Allowance for doubtful receivables

$
200


$
800


$



$
1,000Nine months ended December 31, 2007Allowance for doubtful receivables

$
1,000


$
2,612


$
(3,612
)

$
Valuation allowance for deferred income taxes

$



$
(484
)

$
4,481


$
3,997   (3) Exhibits.
  ExhibitNumber



Description2
.1*



Asset Purchase Agreement dated November 11, 2004 between
    Wolverine Drilling, Inc. and Robert Mau, Robert S.
    Blackford and Pioneer Drilling Services, Ltd.
    (Form 8-K
    dated November 12, 2004 (File
    No. 1-8182,
    Exhibit 2.1)).2
.2*



Asset Purchase Agreement dated November 29, 2004, by and
    among Allen Drilling Company, the Earl Allen Family Trust dated
    April 1, 1979, the sole shareholder of Allen Drilling
    Company, Dixon Allen, Paula K. Hoisington and Lisa D.
    Johonnesson, all of the beneficiaries of the Trust, and Pioneer
    Drilling Services, Ltd.
    (Form 8-K
    dated December 2, 2004 (File
    No. 1-8182,
    Exhibit 2.1)).3
.1*



Articles of Incorporation of Pioneer Drilling Company, as
    amended
    (Form 10-K
    for the year ended March 31, 2001 (File
    No. 1-8182,
    Exhibit 3.1)).3
.2*



Articles of Amendment to the Articles of Incorporation of
    Pioneer Drilling Company
    (Form 10-Q
    for the quarter ended September 30, 2001 (File
    No. 1-8182,
    Exhibit 3.1)).3
.3*



Amended and Restated Bylaws of Pioneer Drilling Company
    (Form 8-K
    dated December 10, 2007 (File
    No. 1-8182,
    Exhibit 3.1)).4
.1*



Form of Certificate representing Common Stock of Pioneer
    Drilling Company
    (Form S-8
    filed November 18, 2003
    (Reg. No. 333-110569,
    Exhibit 4.3)).4
.2*



Credit Agreement between Pioneer Drilling Services, Ltd. and
    Frost National Bank, as Administrative Agent, Agent, Lead
    Arranger and Lender dated October 29, 2004
    (Form 8-K
    dated November 2, 2004 (File
    No. 1-8182,
    Exhibit 4.1)).4
.3*



Second Amendment, dated May 11, 2005, to Credit Agreement
    between Pioneer Drilling Services, Ltd. and Frost National Bank,
    as Administrative Agent, Lead Arranger and Lender dated
    October 29, 2004
    (Form 8-K
    dated May 13, 2005 (File
    No. 1-8182,
    Exhibit 4.1)).4
.4*



Third Amendment, dated October 25, 2005, to Credit
    Agreement between Pioneer Drilling Services, Ltd. and Frost
    National Bank, as Administrative Agent, Lead Arranger and Lender
    dated October 29, 2004
    (Form 8-K
    dated October 28, 2005 (File
    No. 1-8182,
    Exhibit 4.1)).4
.5*



Fourth Amendment, dated December 15, 2005, to Credit
    Agreement between Pioneer Drilling Services, Ltd. and Frost
    National Bank, as Administrative Agent, Lead Arranger and Lender
    dated October 29, 2004
    (Form 8-K
    dated December 16, 2005 (File
    No. 1-8182,
    Exhibit 4.1)). 69




---



##### Table of Contents



ExhibitNumber



Description4
.6*



Fifth Amendment, dated October 30, 2006, to Credit
    Agreement between Pioneer Drilling Services, Ltd. and Frost
    National Bank, as Administrative Agent, Lead Arranger and Lender
    dated October 29, 2004 (Form 8-K dated
    October 31, 2006 (File
    No. 1-8182,
    Exhibit 4.1)).10
.1+*



Pioneer Drilling Services, Ltd. Annual Incentive Compensation
    Plan dated August 5, 2005
    (Form 8-K
    dated August 5, 2005 (File
    No. 1-8182,
    Exhibit 10.1)).10
.2+*



Pioneer Drilling Services, Ltd. Key Executive Severance Plan
    dated August 3, 2007
    (Form 8-K
    dated August 8, 2007 (File
    No. 1-8182,
    Exhibit 10.2)).10
.3+*



Pioneer Drilling Companys 1995 Stock Plan and form of
    Stock Option Agreement
    (Form 10-K
    for the year ended March 31, 2001 (File
    No. 1-8182,
    Exhibit 10.5)).10
.4+*



Pioneer Drilling Companys 1999 Stock Plan and form of
    Stock Option Agreement
    (Form 10-K
    for the year ended March 31, 2001 (File
    No. 1-8182,
    Exhibit 10.7)).10
.5+*



Pioneer Drilling Company 2003 Stock Plan
    (Form S-8
    filed November 18, 2003 (File
    No. 333-110569,
    Exhibit 4.4)).10
.6+*



Pioneer Drilling Company 2007 Incentive Plan (Form DEF14A
    filed June 22, 2007 (File
    No. 1-8182,
    Annex A)).10
.7+*



Joyce M. Schmidt Employment Letter, dated July 17, 2007
    (Form 8-K
    dated July 18, 2007 (File
    No. 1-8182,
    Exhibit 10.1)).10
.8+*



William D. Hibbetts Reassignment Letter, dated July 17,
    2007
    (Form 8-K
    dated July 18, 2007 (File
    No. 1-8182,
    Exhibit 10.2)).10
.9+*



Pioneer Drilling Company Form of Indemnification Agreement
    (Form 8-K dated August 8, 2007 (File
    No. 1-8182,
    Exhibit 10.1)).10
.10+*



Pioneer Drilling Company Employee Relocation Policy Executive
    Officers  Package A
    (Form 8-K
    dated August 8, 2007 (File
    No. 1-8182,
    Exhibit 10.3)).21
.1



Subsidiaries of Pioneer Drilling Company.23
.1



Consent of Independent Registered Public Accounting Firm.31
.1



Certification by Wm. Stacy Locke, President and Chief Executive
    Officer, pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    under the Securities Exchange Act of 1934.31
.2



Certification by Joyce M. Schuldt, Executive Vice President and
    Chief Financial Officer, pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    under the Securities Exchange Act of 1934.32
.1



Certification by Wm. Stacy Locke, President and Chief Executive
    Officer, pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code).32
.2



Certification by Joyce M. Schuldt, Executive Vice President and
    Chief Financial Officer, pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code).        70




---



##### Table of Contents



SIGNATURES
      By:
    /s/  Wm.
    Stacy Locke         Signature

Title

Date/s/  C.
    Robert BunchC.
    Robert Bunch

Chairman

February 25, 2008/s/  Wm.
    Stacy LockeWm.
    Stacy Locke

President, Chief Executive Officer and Director (Principal
    Executive Officer)

February 25, 2008/s/  Joyce
    M. SchuldtJoyce
    M. Schuldt

Executive Vice President,
    Chief Financial Officer and Secretary
    (Principal Financial and Accounting Officer)

February 25, 2008/s/  C.
    John ThompsonC.
    John Thompson

Director

February 25, 2008/s/  Dean
    A. BurkhardtDean
    A. Burkhardt

Director

February 25, 2008/s/  Michael
    F. HarnessMichael
    F. Harness

Director

February 25, 2008  71




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##### Table of Contents



Index To
    Exhibits
  2
.1*



Asset Purchase Agreement dated November 11, 2004 between
    Wolverine Drilling, Inc. and Robert Mau, Robert S.
    Blackford and Pioneer Drilling Services, Ltd.
    (Form 8-K
    dated November 12, 2004 (File
    No. 1-8182,
    Exhibit 2.1)).2
.2*



Asset Purchase Agreement dated November 29, 2004, by and
    among Allen Drilling Company, the Earl Allen Family Trust dated
    April 1, 1979, the sole shareholder of Allen Drilling
    Company, Dixon Allen, Paula K. Hoisington and Lisa D.
    Johonnesson, all of the beneficiaries of the Trust, and Pioneer
    Drilling Services, Ltd.
    (Form 8-K
    dated December 2, 2004 (File
    No. 1-8182,
    Exhibit 2.1)).3
.1*



Articles of Incorporation of Pioneer Drilling Company, as
    amended
    (Form 10-K
    for the year ended March 31, 2001 (File
    No. 1-8182,
    Exhibit 3.1)).3
.2*



Articles of Amendment to the Articles of Incorporation of
    Pioneer Drilling Company
    (Form 10-Q
    for the quarter ended September 30, 2001 (File
    No. 1-8182,
    Exhibit 3.1)).3
.3*



Amended and Restated Bylaws of Pioneer Drilling Company
    (Form 8-K
    dated December 10, 2007 (File
    No. 1-8182,
    Exhibit 3.1)).4
.1*



Form of Certificate representing Common Stock of Pioneer
    Drilling Company
    (Form S-8
    filed November 18, 2003
    (Reg. No. 333-110569,
    Exhibit 4.3)).4
.2*



Credit Agreement between Pioneer Drilling Services, Ltd. and
    Frost National Bank, as Administrative Agent, Agent, Lead
    Arranger and Lender dated October 29, 2004
    (Form 8-K
    dated November 2, 2004 (File
    No. 1-8182,
    Exhibit 4.1)).4
.3*



Second Amendment, dated May 11, 2005, to Credit Agreement
    between Pioneer Drilling Services, Ltd. and Frost National Bank,
    as Administrative Agent, Lead Arranger and Lender dated
    October 29, 2004
    (Form 8-K
    dated May 13, 2005 (File
    No. 1-8182,
    Exhibit 4.1)).4
.4*



Third Amendment, dated October 25, 2005, to Credit
    Agreement between Pioneer Drilling Services, Ltd. and Frost
    National Bank, as Administrative Agent, Lead Arranger and Lender
    dated October 29, 2004 (Form 8-K dated
    October 28, 2005 (File
    No. 1-8182,
    Exhibit 4.1)).4
.5*



Fourth Amendment, dated December 15, 2005, to Credit
    Agreement between Pioneer Drilling Services, Ltd. and Frost
    National Bank, as Administrative Agent, Lead Arranger and Lender
    dated October 29, 2004
    (Form 8-K
    dated December 16, 2005 (File
    No. 1-8182,
    Exhibit 4.1)).4
.6*



Fifth Amendment, dated October 30, 2006, to Credit
    Agreement between Pioneer Drilling Services, Ltd. and Frost
    National Bank, as Administrative Agent, Lead Arranger and Lender
    dated October 29, 2004
    (Form 8-K
    dated October 31, 2006 (File
    No. 1-8182,
    Exhibit 4.1)).10
.1+*



Pioneer Drilling Services, Ltd. Annual Incentive Compensation
    Plan dated August 5, 2005
    (Form 8-K
    dated August 5, 2005 (File
    No. 1-8182,
    Exhibit 10.1)).10
.2+*



Pioneer Drilling Services, Ltd. Key Executive Severance Plan
    dated August 3, 2007
    (Form 8-K
    dated August 8, 2007 (File
    No. 1-8182,
    Exhibit 10.1)).10
.3+*



Pioneer Drilling Companys 1995 Stock Plan and form of
    Stock Option Agreement
    (Form 10-K
    for the year ended March 31, 2001 (File
    No. 1-8182,
    Exhibit 10.5)).10
.4+*



Pioneer Drilling Companys 1999 Stock Plan and form of
    Stock Option Agreement
    (Form 10-K
    for the year ended March 31, 2001 (File
    No. 1-8182,
    Exhibit 10.7)).10
.5+*



Pioneer Drilling Company 2003 Stock Plan
    (Form S-8
    filed November 18, 2003 (File
    No. 333-110569,
    Exhibit 4.4)).10
.6+*



Pioneer Drilling Company 2007 Incentive Plan (Form DEF14A
    filed June 22, 2007 (File
    No. 1-8182,
    Annex A)).10
.7+*



Joyce M. Schmidt Employment Letter, dated July 17, 2007
    (Form 8-K
    dated July 18, 2007 (File
    No. 1-8182,
    Exhibit 10.1)). 72




---



##### Table of Contents



10
.8+*



William D. Hibbetts Reassignment Letter, dated July 17,
    2007
    (Form 8-K
    dated July 18, 2007 (File
    No. 1-8182,
    Exhibit 10.2)).10
.9+*



Pioneer Drilling Company Form of Indemnification Agreement
    (Form 8-K
    dated August 8, 2007 (File
    No. 1-8182,
    Exhibit 10.1)).10
.10+*



Pioneer Drilling Company Employee Relocation Policy Executive
    Officers  Package A
    (Form 8-K
    dated August 8, 2007 (File
    No. 1-8182,
    Exhibit 10.3)).21
.1



Subsidiaries of Pioneer Drilling Company.23
.1



Consent of Independent Registered Public Accounting Firm.31
.1



Certification by Wm. Stacy Locke, President and Chief
    Executive Officer, pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    under the Securities Exchange Act of 1934.31
.2



Certification by Joyce M. Schuldt, Executive Vice President and
    Chief Financial Officer, pursuant to
    Rule 13a-14(a)
    or
    Rule 15d-14(a)
    under the Securities Exchange Act of 1934.32
.1



Certification by Wm. Stacy Locke, President and Chief Executive
    Officer, pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code).32
.2



Certification by Joyce M. Schuldt, Executive Vice President
    and Chief Financial Officer, pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002 (Subsections (a) and (b) of Section 1350,
    Chapter 63 of Title 18, United States Code).        73