SECONDAMENDMENT TO LOAN AGREEMENT

Exhibit 4..3

SECOND AMENDMENT TO LOAN AGREEMENT

THIS SECOND AMENDMENT TO LOAN AGREEMENT (the “First Amendment”) is entered into as of the 3rd day of July, 2002, by and between PIONEER DRILLING COMPANY, a Texas corporation, formerly known as South Texas Drilling & Exploration, Inc. (“Borrower”), and THE FROST NATIONAL BANK, a national banking association (“Lender”) and this amendment is joined in  by PIONEER DRILLING SERVICES, LTD., a Texas limited partnership, formerly known as Pioneer Drilling Co., Ltd.,  (“Pioneer”).

R E C I T A L S

A.            On August 11, 2000, Borrower and Lender entered into that certain Loan Agreement (as amended, the “Agreement”) concerning the terms, conditions and covenants of certain Credit Facilities.

B.            Borrower has requested and Lender has agreed to consent to Borrower’s sale of certain subordinated debentures.

C.            All capitalized terms not otherwise defined in this First Amendment shall have the same meanings as are set forth in the Agreement.

NOW, THEREFORE, for  and in consideration of the mutual covenants and promises herein contained, Lender and Borrower agree as follows:

AGREEMENTS

1.             Section 8, subsection (e) is deleted in its entirety and the following is substituted in its place:

(e)           Indebtedness.  Create, incur or assume any indebtedness for borrowed money or issue or assume any other note, debenture, bond or other evidences of indebtedness, or guarantee any such indebtedness or such evidences of indebtedness of others, (or permit Pioneer to do so) other than (i) borrowings from Lender, (ii) borrowings from lenders other than Lender, except that during the term of the Loan, Borrower and Pioneer (in the aggregate) shall be permitted to incur or have outstanding indebtedness to other lenders provided that the aggregate principal balance of all such debt outstanding at any time shall not exceed $5,000,000.00 (exclusive of the subordinated debt in the total amount of $28,000,000.00 described in that certain Subordination Agreement as of July 3, 2002 (the “Convertible Subordinated Debentures”) and (iii) the Convertible Subordinated Debentures.

2.             Except as specifically modified or amended herein, all terms, provisions and requirements of the Agreement shall remain as written, and as amended from time to time.  Borrower hereby reaffirms all covenants, conditions, representations and warranties contained in the Agreement, as amended by this First Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date first above written.

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